Trade rules formalizing moving U.S. resuming beef exports to China

American beef is another step closer to reaching the Chinese market.

On Monday, the U.S. Department of Agriculture announced that it had reached an agreement with Chinese officials on final details of a protocol to allow the U.S. to start exporting beef to China for the first time since 2003.

The announcement is part of the U.S.-China 100-day action plan that was announced in May and was discussed at length during Montana Sen. Steve Daines’ Ag Summit in Great Falls earlier this month.

“We’ve been shut out of that market for years,” said Kent Bacus, director of international trade and market access for the National Cattlemen’s Beef Association. Bacus was speaking during a panel at the Ag Summit.

Bacus told the crowd of nearly 700 that China has become the second largest beef importer after the U.S.

China’s beef imports have increased from $275 million in 2012 to $2.5 billion in 2016, according to USDA. The U.S. is the world’s largest beef producer and was the world’s fourth-largest exporter, with global sales of more than $5.4 billion in 2016.  Until the ban took effect, the U.S. was China’s largest supplier of imported beef, providing 70 percent of their total intake, according to the USDA.

He said that China lifting the ban was a nominal step and that the devil would be in the details of the technical discussion with food safety agencies in China.

Bacus said they had seen some progress with the Obama administration but progress had slowed until Daines pushed the matter with the Trump administration and the goal was now to have American beef in China on or before July 16.

Bacus said the thing to watch will be the restrictions the Chinese place on U.S. beef production and their main concern is bovine spongiform encephalopathy, more commonly known as mad cow disease.

“Today is a great day for the United States and in particular for our cattle producers, who will be regaining access to an enormous market with an ever-expanding middle class,” Secretary of Agriculture Sonny Perdue said in a statement. “I have no doubt that as soon as the Chinese people get a taste of American beef they’ll want more of it.”

On Monday, Perdue announced the posting of technical documents related to the beginning of shipments.

American beef exports to China must meet specific requirements under the USDA export verification program and those requirements apply to U.S. companies, including slaughterers, fabricators and/or processors, that supply beef and beef products as listed on the USDA Food Safety and Inspection Service (FSIS) website.

Specified requirements for exports to China include:

  • Beef and beef products must be derived from cattle that were born, raised, and slaughtered in the U.S., cattle that were imported from Canada or Mexico and subsequently raised and slaughtered in the U.S., or cattle that were imported from Canada or Mexico for direct slaughter;
  • Cattle must be traceable to the U.S. birth farm using a unique identifier, or if imported to the first place of residence or port of entry;
  • Beef and beef products must be derived from cattle less than 30 months of age;
  • Chilled or frozen bone-in and deboned beef products are eligible for shipment.  For a complete listing, refer to the FSIS Export Library; and
  • Carcasses, beef, and beef products must be uniquely identified and controlled up until the time of shipment.

Only eligible products may be issued an FSIS Export Certificate.  The Agricultural Marketing Service verifies that cattle meet the specified product requirements.

“Montana ranchers have been waiting for this day for 13 years,” Montana Stockgrowers Association Executive Vice President Errol Rice said Monday in a statement. “Restored access to China’s 1.3 billion consumers will create an immense market potential for Montana ranchers.”

The Montana Stockgrowers Association is still evaluating the technical aspects of the agreement.

Rice told The Electric this week that the group feels that the technical requirements are doable in Montana “and if the opportunity is right, we’re confident that Montana ranchers will easily be able to comply with the guidelines.”

The beef industry in Montana contributes roughly $1 billion to the state economy, Rice said. 

He said all countries that take U.S. beef have requirements that are similar across the board, but some have particular nuances,  such as Europe won’t accept beef treated with hormones or antibiotics. 

Montana ranchers don’t finish or process much cattle in the state and the majority is shipped to the midwest in the fall, but a large percentage of beef from Montana cattle is exported because of high quality and high demand internationally, Rice said.

China will want information to source animals back to their farm of origin, prior to being processed, which are logistics being worked out by the market now, he said.

Processors are already negotiating with buyers in China and once orders are put into play, Rice said they expect their will be a call for Montana ranchers to qualify to export.

“There’s complexity to the qualifications, but we still view this as a tremendous opportunity for ranchers,” Rice said, and it’s “created a lot of optimism. We’re confident the industry knows how to work through the requirements in an effective way.”

But other market factors will also play a part.

President Trump withdrew the U.S. from the Trans-Pacific Partnership earlier this year and Bacus said the agreement is still moving forward, but without the U.S.

He told attendees at  Daines’ Ag Summit that more competitors, especially New Zealand and Australia, will be larger players in the Pacific markets.

“We’re going to put our market share at risk,” Bacus said. “We’re going to jeopardize our access.”

He said Mexico is also aggressively pursuing trade agreements and that will likely cause more competition in North America.

Matt Gibson, vice president and general manager of Bunge North America, said that since Mexico has to import a lot of food, the U.S. is at a disadvantage if it’s not part of trade agreements. Bunge is an agribusiness and food ingredient company based in St. Louis.

He said agriculture and the U.S. needs to send a message to Mexico that it still wants to be main supplier of beef, grains and pulses.

Global beef and veal production is expected to grow less than 2 percent this year to nearly 62 million tons, primarily from gains in the U.S., Brazil and Argentina, according to USDA’s Foreign Agriculture Service.

U.S. beef and veal production is expected to grow more than 5 percent in 2017 to more than 12 million tons, reaching a 9-year high, according to FAS.

The FAS’ April report speculates that larger supplies and lower beef prices will boost exports to Japan and South Korea and lower the U.S. need for imports. The report also suggests the U.S. will benefit from reduced supply from Australia as they compete in Asian markets.

But, the relative strength of the dollar remains a challenge for export growth in Mexico and Canada, though lower U.S. prices offset some of the exchange rate impacts, according to the report.