Major Montana beef deal with China includes plans for meat processing plant

The Montana Stockgrowers Association, Cross Four Ranch and JD.com, one of China’s largest retailers, have signed an agreement to purchase a minimum of $200 million in Montana-sourced beef over the next several years.

Sen. Steve Daines was a key player in getting the deal and JD.com will also seek to invest up to another $100 million to build a processing plant in Montana to support beef production, with construction beginning as early as 2018.

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

A location has not been selected for the processing plant and so far, none of the players have indicated that the deal is related to the proposed Madison Food Park southeast of Great Falls.

Todd Hanson, spokesman for Madison Food Park, said the developers have not been contacted by Montana Stockgrowers Association or any member of the Montana congressional delegation in regard to their proposed slaughterhouse in Cascade County or the China deal.

“Friesen Foods and Madison Food Park representatives are open to the opportunity to discuss with any and all of the aforementioned parties the potential areas of collaboration in bringing a focused effort to develop a cattle processing facility in the State of Montana,” Hanson said.

Hanson said they’ve reached out to Fred Wacker, vice president of the Montana Stockgrowers Association, requesting an opportunity to discuss the China deal but they have not received a response yet.

“This landmark agreement has the potential to substantially increase Montana opportunity and agricultural exports to the fastest growing overseas market for beef,” Daines said in a release. “This is a win for Montana’s hardworking ranchers.”

The deal was initially signed on Oct. 23, but the announcement was timed to coincide with President Trump’s visit to China.

In September, Daines hosted a roundtable in Belgrade with the Chinese Ambassador Cui Tiankai, Chinese business representatives and Montana agricultural leaders and the group discussed opportunities for expanding the relationship between Montana producers and Chinese consumers.

During that event, there was discussion of developing a meat processing plant in Montana, according to Chinese news site Xinhaunet, a subsidiary of the official press agency for the People’s Republic of China.

In September, Xinhaunet reported that Fred Wacker, vice president of the Montana Stockgrowers Association, told participants that most U.S. meat producers that have been approved to export beef to China are located in Nebraska, Iowa and Kansas and that it’s costly to send cattle to those plants. Wacker is also the owner of Four Cross Ranch.

“We have the land, we have the cattle, we have the quality, we have the water,” Wacker told Xinhaunet in September. “We have the interest in putting in a major processing plant here, and we also have very high-quality products.”

JD.com intends to import Montana-sourced beef from MSGA members to China for direct sale to the 258 million Chinese consumers on its e-commerce platform, according to a release from Daines’ office. The agreement is proposed for an initial three years, with a minimum commitment of $200 million in beef to be imported by JD.com from MSGA members at fair market value during the term. If fulfilled, it is estimated that JD.com’s purchase of beef will increase Montana beef export sales by as much as 40 percent in 2018.

Click here to read the official signing agreement and click here to read the initial business agreement signed on Oct. 23 by Errol Rice, Executive Vice President, Montana Stockgrowers Association; Fred Wacker, Owner/Operator, Cross Four Ranch; Richard Liu, Chairman & CEO, JD.com, Inc.; and Chen Xu, President & CEO of Bank of China USA.

 

“The Montana Stockgrowers Association thanks Sen. Daines for his work on expanding opportunities and access to overseas markets for Montana ranchers, particularly in lifting the ban on U.S. beef in China earlier this year,” Rice said in a release. “While there’s a lot of work that needs to be done, this MOA represents a great step in the right direction for selling more U.S. beef in China and developing productive relationships between Montana ranchers and Chinese consumers.”

According to the Montana Stockgrowers Association, beef is the fastest growing sector in China and the world’s fastest growing overseas market for beef.

“China’s market has the potential to be a game-changer for Cross Four Ranch and Montana ranchers more broadly,” Wacker said in a release. “The MOA shows how much interest there is in China for high quality cattle and beef from Montana and the U.S. and I appreciate Senator Steve Daines’ efforts to help connect me with potential Chinese buyers.”

Brett Doney of the Great Falls Development Authority said they haven’t been involved in this deal but applauded the efforts of those who were.

“Asia is an excellent market for Montana food products and food ingredients,” Doney said. “There’s a great Montana reputation for quality and consistency.

This deal could be part of larger effort to do something similar to what has happened with Pasta Montana which has moved from shipping just raw wheat to now shipping pasta, creating a value added and larger market share for Montana producers.

China has a large and growing middle class, Doney said, that is now more conscious of their food quality and purity.

“The Montana brand could really be used to break into that market,” he said.

It’s also something that has been talked about for years by people like Ambassador Max Baucus, Montana governors and Daines.

“It’s something we have to pursue, because if we don’t places like Australia are going to,” Doney said. “This is an example of what tremendous opportunity there is in China and other Asian countries.”