A new trade report analyzing the impact of beef imports and exports highlights the strong economic value of the US beef industry’s involvement in global markets.
The report, “Evaluating the Economic Impact Following U.S. Losses, Beef Exports and Imports,” was published by his Derrell Peel. Peale has questioned beef imports throughout his career, but many believe the United States produces more than enough beef to feed its population. He said he doesn’t recognize the value of exports. His findings prove the opposite. “One of the key takeaways from this report is the realization that while producers produce cattle as one product, there are thousands of different products to sell,” he said.
“The market plays a big role in choosing the best value of all products that ultimately contribute to the overall value of cattle.” Products help the industry grow. “Both imports and exports of beef provide value creation opportunities for U.S. industry by exporting products that are more valuable in foreign markets and importing products that are cheaper to obtain in international markets,” reported.
Peel explained that the US is a “relatively mature market” for beef demand, adding that there is much more potential in the global market. “The growth potential of this industry is increasingly being driven by the retail sector, highlighting the fact that the market has grown rapidly over the last 20 to 30 years. The Peel and Tonsor study shows that a 10% decline in beef imports and exports over a decade would cost beef producers $20 billion. A 100% full loss scenario would be catastrophic, with a feed cattle marketer estimated to lose $129 billion and a feed cattle marketer $68 billion, according to the report. “If we don’t take action, ultimately there will be huge economic losses and the beef industry will be much smaller,” Peel said.
He analyzed the source and composition of beef imports to examine the role of beef imports in the US beef industry. With the demand for hamburgers so high in the United States, ground beef turned out to be the main driver of beef imports. About 24% of the 8.1 billion pounds of ground beef is imported cattle. “Without imported beef, there is not enough lean beef to use all of the ground beef ingredients from the United States,” the report noted, and in doing so it would lead to one of several outcomes:
One way is to simply produce less ground beef and offer the excess leftovers at a much lower price on the tallow market.
The second option is simply to increase the ratio of forage carcass and reduce the amount of forage. It is to offset with the carcass given. While there may be enough round products available to meet lean ground meat requirements, Peel and Tonser said it would cause major disruption to other beef markets that currently use these products.
“Beef thighs and other cuts are no longer ground because they are of high value for other uses. It could also be raised as unfed beef (think Australian beef) to produce lean meat that can be used for cows and bulls. These animals would have a higher value in the current system if produced for fattening, they explained.
Peel and Tonser explained that value can be created by scaling up and making the most efficient use of leftovers. “Beef imports are just one part of a very complex set of markets that make up the beef industry.”
For more insight, the full report is available here.
