Tick tock—patience also required for US beef trade

Kent Bacus, National Cattlemen’s Beef Association’s director of international trade and market access, is optimistic about the potential of beef exports to Asian markets. Bacus gave a beef trade update at the Nebraska Cattlemen’s Convention and Trade Show, Dec. 6 in Kearney, Nebraska.

It’s been a busy year in Washington, Bacus said, and a year has made a difference.

“When it comes to trade it’s a little more uncertain,” Bacus said.

He thinks it’s important to look at what the Trump administration has targeted for 2017, and within the first few days of taking office President Donald Trump made good many of his campaign promises.

“One of those was to withdraw the United States from the Trans-Pacific Partnership,” he said. “As you all know this is a trade agreement that we all strongly supported and strongly advocated for because of the benefits it would hold for us.”

The tariff rate for Japan and the access it would have given to the Asian market was affected, as was the leverage this country would have had over all the other Asian countries who were looking to join TPP. Both sides of the aisle wanted this, Bacus said.

“Unfortunately we’re still going to have to deal with the ramifications of this,” he said. “But in exchange for the TPP we’ve been promised the administration’s going to engage in bi-lateral trade agreements.”

NCBA and other livestock groups petitioned the White House right away to prioritize a bi-lateral trade agreement with Japan.

“If we have a promise that we’re supposed to get a better deal then we want to see it going now,” Bacus said. “Unfortunately we’re about a year since the withdrawal from TPP and we still have yet to see meaningful engagement from or advancement in that bi-lateral talk.”

Japan is not interested in a bi-lateral agreement, as its eggs are in the TPP basket. The other remaining TPP countries have been meeting throughout the year and have recently decided to move forward without the U.S.

“Canada is still dragging its feet there, but we just think it’s a matter of time until they fall in line,” he said. “That’s unfortunate because we fought really hard for some of the best that we could have asked for from Japan, and as a result we’re not going to be able to enjoy those benefits, but our competitors will.”

Bacus said the EU and the Japanese are very close to implementing a trade agreement where beef producers will essentially get the same terms the U.S. would have had under TPP.

“They’ll now enjoy that 9 percent tariff rate that we fought so hard to get,” he said.

A priority for NCBA is to continue pushing the Trump administration to deliver on its promise for a better deal into Japan.

Bright spots

The shining moment for 2017 has to be getting beef back into the Chinese market, Bacus said.

“We were very excited that after 13 years of being out of the Chinese market, we’ve now been able to restore that access,” he said.

The change in administration and delay in getting U.S. Department of Agriculture personnel hired had Bacus concerned, but the U.S. has been “very lucky” toward the end of last year when China nominally lifted the ban on U.S. beef.

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“We still have some technical talks that we need to get through first,” he said. “Well that’s where the devil lies is in the details. That was our big concern that this is going to get put on the back burner.”

NCBA encouraged Trump when he met with the Chinese president in March to serve him steak and to “keep that conversation going” on U.S. beef.

“We considered that a victory, but what we were really happy to see was that there was an agreement on 10 items that both the United States and Chinese governments wanted to accomplish within 90 days of this summit,” Bacus said.

The goal from the meeting was to try and have the first beef shipments into China by July 16. U.S. officials beat the goal by a couple of weeks.

“We had a great opportunity not only meet with some of these new customers in China, but also be there along side secretary Perdue and to have that experience,” Bacus said. “It’s truly memorable.”

Bacus realizes it will take time to develop the Chinese market for beef, and there are still some restrictions. But the good outweighs the negative, especially when it comes to the prospects of the emerging middle class in China. It’s a country that’s quickly becoming the biggest beef importer in the world.

“As the middle class emerges they will try to incorporate more protein into their diet,” Bacus said. “While poultry and pork are still the predominant proteins there, beef is a hot commodity item.”

Most of the imported beef in China is finished primarily on grass and coming from South America, Brazil, Uruguay, New Zealand and Australia. Only about 5 percent of grain-finished beef goes into the China market. Most of that originates from Australia.

“Their grain-finished beef really doesn’t hold a candle to ours,” Bacus said. “Don’t worry, I tell our Australian friends that all the time. But that’s the market we’re going to go after.”

The U.S. Meat Export Federation, according to Bacus, estimates the market for U.S. beef to reach $300 million in China over the next couple of years.

“It’s going to take us some time to adjust for that market, given their restrictions on both hormones and betagonists,” Bacus said. “It’s going to take us a while for our supply to catch up. But we also have to develop that demand.”

It’s been illegal to sell or purchase U.S. beef in China for 14 years, and now the supply chain has to be developed.

“We have to go identify those customers. We have to market to them. We have to expose them to the high quality grain finished product we produce, then we have to establish that consumer base,” Bacus said. “We still have a lot ahead of us in China. But that is a bright moment from this year.”

Kylene Scott can be reached at [email protected] or 620-227-1804.