000264 U.S. Beef Exports Hit Record Levels in 1999

Washington - “U.S. beef and beef variety meats exports set record levels on a volume basis in 1999,” says Chuck Lambert, National Cattlemen's Beef Association (NCBA) chief economist. “The U.S. beef industry exported nearly 2.45 billion pounds (or 1113.6 million metric tons) of beef products valued at more than $3.2 billion during 1999.”

According to figures just released by the U.S. Department of Agriculture (USDA), total exports of U.S. beef and beef variety meats during 1999 increased nearly 9% in volume compared to exports during 1998, while the value of U.S. beef exports increased nearly 14.3%. Since 1990, U.S. beef exports increased over 100% on a volume level.

“With higher U.S. beef prices and export value increasing faster than tonnage there is clear evidence of increasing demand in the international market,” Lambert said. “By 2005, U.S. beef and beef variety meats are expected to reach 3.67 billion pounds, a 64% increase.”

Increase in international demand for U.S. beef has supplemented the domestic increase in U.S. beef demand helping to bring profitability to the U.S. beef industry.

“Domestic beef demand improved by nearly 4% during 1999 -- the first increase in U.S. beef demand in 20 years. To keep that growth, expanding trade beyond U.S. borders will be vitally important,” said Lambert. “Only four percent of the world's population lives in the United States. Population demographics show that the U.S. beef industry must continue to aggressively seize opportunities to market products in countries with young, fast-growing populations possessing increasingly disposable incomes in order to maintain beef demand.

“U.S. beef exports increased to the top three markets -- Japan, Mexico and South Korea. Recovery in Asian economies, especially Korea, continued economic prosperity in Mexico and increasing global consumer confidence that U.S. beef is the safest and most wholesome in the world has contributed to improved international demand for U.S. beef,” according to Lambert.

U.S. beef exports to Japan increased 9.1% to nearly 1.125 billion pounds in volume and 9.7%, to more than $1.7 billion, in value, higher than any year except 1996.

Exports to Mexico increased 11% over 1998 to 457 .6 million pounds. These exports were valued at more than $512 million, a 13.5% increase.

U.S. beef exports (including variety meats) to South Korea increased by 98% in volume to 250 million pounds and by 132% in value to $343.5 million.”

Beef imports also increased 8.2% in volume and nearly 16.5% in value during 1999. Increasing U.S. beef prices and increasing U.S. beef demand attracted additional imported product, according to Lambert. Devaluation of currencies in Australia, Brazil and other Latin American countries and increased beef production in some beef exporting countries also contributed to the difference in 1999 versus 1998 numbers, Lambert says.

“The U.S. beef industry remained a net exporter of beef, beef products and cattle on a value basis during 1999 and this surplus will continue in 2000,” says Lambert. “But to grow the trade surplus, expanding access to international markets is vital. There is tremendous economic potential in the global marketplace for U.S. beef if enforceable global trading rules are in place and in use that grant market access, settle disputes on the basis of science and reduce tariffs. We need to make international trade work for the U.S. cattlemen and the beef industry.”

Access Issues in Key Growth Markets:

China -- The U.S. beef industry sees huge potential gains in the China trade package that was finalized during November 1999. If the agreement were implemented, tariffs on some major beef categories would decline from a current rate of 45% to 12% in 2004. Many beef variety meats tariffs would decline from a current level of 23% to 12% in 2004. China has the potential to be in the top three markets for U.S. beef worth $500 million if the agreement is implemented.

A condition for any trade agreement with China to be finalized and implemented is that Congress must grant Permanent Normal Trading Relations (PNTR) for China. “Congress must separate the importance of trade and access to emerging markets for U.S. agricultural products from other political concerns and approve PNTR for China,” Lambert said.

Japan -- Japan remains the largest export market for U.S. beef representing 47% of volume and 55% of value. Current tariffs are set 38.5%. The U.S. beef industry will continue to work to get this rate to 12%, the level negotiated in the China agreement.

Korea -- As the third largest export market for U.S. beef, current tariffs are set at 40%. The U.S. beef industry will continue to work to get this rate to 12%, the level negotiated in the China agreement. There is currently a case with the World Trade Organization (WTO) to fully open the Korean market by 2001.

Mexico -- U.S. beef trade with Mexico has been a key global trade success since NAFTA was implemented in 1994, Lambert adds. U.S. cattlemen have developed a strong and vital two-way trading relationship with Mexican cattlemen and share a common goal to improve beef marketing and increase demand for beef. Mexico in 1997 outpaced the Canadian market as the number two U.S. beef importer since the drought in Mexico reduced the Mexican herd and Mexican consumers reached to the U.S. market to satisfy their demand for beef.

As Mexican cattlemen continue to rebuild their herds, the rate of growth for U.S. beef exports to Mexico is expected to slow somewhat, Lambert says. At the same time, Mexican feeder cattle movement to the United States increased to nearly one million during 1999 -- about the average for imports of calves from Mexico during 1985-1995, Lambert says.

Canada -- Lambert also sees a continuing trend for more shipments of U.S. feeder cattle to Canada due to international trade initiatives like the Northwest Project with Canada. During October 1, 1999 through March 31, 2000 more than 175,000 U.S. feeder cattle will be exported to Canada. These exports include more than 10% of the 1999 Montana calf crop exported to Canadian feedlots.

Europe -- The U.S. beef industry continues to explore with U.S. negotiators alternatives for resolving the European Union (EU) ban on U.S. beef. However, Lambert points out that the EU has undermined the current WTO system by using stall and delay tactics to keep out U.S. beef.

“The integrity and validity of the WTO as a dispute settlement body requires that WTO members promptly comply with recommendations and rulings,” he says. “The WTO has ruled and the EU ban on U.S. beef is an unfair, illegal trade barrier.”

Initiated in 1898, the National Cattlemen's Beef Association is the trade association of America's cattle farmers and ranchers, and the marketing organization for the largest segment of the nation's food and fiber industry. NCBA is producer-directed but consumer-focused, with offices in Denver, Chicago and Washington D.C.

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E-mail: sflanagan@sprintmail.com