International trade focus of keynote at Stockmanship and Stewardship event

Kent Bacus and Dan Halstrom closed out the Stockmanship and Stewardship virtual event Nov. 1 hosted by the National Cattlemen’s Beef Association, Beef Quality Assurance, the Beef Checkoff and Merck with their keynote session titled “Strengthening Our Industry Through International Trade.”

Bacus, senior director, international trade and market access for NCBA, discussed the good, the bad and the ugly of agricultural trade policy and why it’s important to beef producers.

“We’ve seen a lot of opportunities for growth in our export markets,” he said. “But trade policy is not that simple. It’s actually very complicated, and there’s a lot of things that we have to take into consideration.”

Looking at the United States cattle sector overall, it’s a $78 billion industry, with beef producers caring for roughly 35% of the U.S. landmass. According to Bacus, because of the active management of beef producers, they care for and improve more than 800 million acres of wildlife habitat, unique landmarks and delicate ecosystems. Trade is definitely a piece of this puzzle.

“When you look at global beef production, most of the world produces a grass-finished product,” he said. That includes India, Brazil, China and the European Union, and Bacus noted grass-finished beef is a leaner product.

In the U.S., 95% of what’s raised is finished on grain, simply because of the structure of the beef industry. Canada, Australia, Mexico and Uruguay also finish beef on grain, but according to Bacus, “no one really competes with us on size and quality when it comes to grain-finished beef.”

The U.S. cattle herd is perceived to be flooded with imported cattle—thus suppressing cattle prices—and Bacus said this is just not the case.

“But the truth is we have a herd size of 92 million head, and less than 2 million are actually born in other countries or imported,” he said. “We import cattle from two countries—from Canada and Mexico. We don’t really import from anywhere else in the world. We haven’t over the last decade.”

That’s because of animal health restrictions, but even then those volume numbers are really small.

“When it comes to livestock, really only about 2% of our herd was born in another country.”

He said only 12.5% of beef consumed in the U.S. is imported, mostly lean beef trimmings from neighboring countries or Australia and New Zealand.

Regarding the volume of U.S. beef that is exported, Bacus said when you think about everything that’s produced in the U.S., we’re one of the biggest producers in the world.

“We produce primarily for the American market, and about 85% of what we produce is going to be consumed by Americans,” he said. “We are exporting on a volume of about 15% of what we’re raising.”

The value of per head slaughter is about $471 per head, but the number has grown over the past decade, Bacus said. “In 2010 our total annual exports were about $4 billion. In 2018, that number jumped to about 8.3 billion.”

From 2012 to August of 2022, $8.2 billion was exported globally.

“That’s about a billion dollars per month,” he said.

Is it going to be possible to see $12 billion in total exports by the end of 2022? It could be possible, according to Bacus.

He noted the U.S. primarily exports cuts that Americans find less desirable

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Markets in Korea, China, Japan and Mexico for cuts that normally don’t sell well in the U.S. add about $471 per head.

“The U.S. is also a major importer. We imported about $6.2 billion worth of beef during the first eight months of this year,” he said.

Those imports are mostly lean trimmings that come from Australia, Brazil, New Zealand, and Nicaragua and are used for products like canned chili.

Looking at Brazil, it’s “certainly a lightning rod country” for producers who have a lot of questions about the safety of their lean trim and beef that’s going to end up being cooked product.

“At the end of the day, we’re going to continue to both import and export beef around the world,” he said.

In the future Bacus expects to see more focus on supply chain resiliency—it’s not just a buzzword, but instead “kind of the fundamental driver of the Joe Biden administration.”

“And I think as a government that will transition into to whoever’s in power in the next administration,” he said. “We will continue to look and see if tariffs will be used as frequently as the previous administration. There are a lot of existing tariffs that remain in place.”

A big question remains about the future of tariffs and trade agreements. Those in agriculture could face those in Europe and other like-minded countries who debate between science and the precautionary principle.

“Precautionary principle basically allows the Europeans to use subjective terms to restrict market access, then ignore science or at least put other things that equal level of science,” he said. “And for us, that’s a big concern, because it certainly allows for more barriers to be put in place.”

It remains to be seen whether those changes will be driven by their government or ours. But looking forward, Bacus said there are some key issues moving forward—animal welfare, traceability, sustainability—and all of these are factors that can benefit us when it comes to international trade.

“We have a really good system here. We’re very competitive,” he said. “We’ve been able to access a lot of these markets because we have some of the highest standards in the world—some of the safest interlocking safeguards—and because we have a great product. I mean, there’s no question that foreign consumers want more U.S. beef. They trust the producers that are raising this product, and we have to be able to access that.”

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