Commentary by Bill Bullard, CEO, R-CALF USA
Year-to-year exports of U.S. beef and cattle were down last year, the volume of exports was down 13 percent, and the value of exports was down nearly 15 percent. And yet, the year-to-year 5-Area fed cattle steer price was nearly 22 percent higher.
So, exports went down and prices went up. That’s not what you’d expect after the years of cheerleading the beef industry has done to convince U.S. cattle producers that exports are the principal determinate of their profitability.
Let’s take a look at where this notion – that exports are the determinate of profitability for domestic cattle producers – originated.
It started when the “powers that be” jumped headfirst into the swamp of globalization and promised prosperity for all under the theory of free trade. That happened three decades ago when the United States embraced globalization and entered the North American Free Trade Agreement or NAFTA.
The promise by the global elites was that NAFTA would expand access for U.S. beef to more beef consumers abroad, and with more beef consumers abroad, the demand for U.S. beef and cattle would increase dramatically and U.S. cattle producers would roll in prosperity.
Then after NAFTA the beef industry fought for and won even more free trade agreements with even more cattle producing countries, including with Australia, Costa Rica, Honduras and Nicaragua. And they still want more, including with New Zealand.
But what of the three-decade-old promise that globalization would bring prosperity to the U.S. cattle industry?
Well, since NAFTA we’ve reduced our nation’s beef cow herd by over 18 percent, we’ve lost 32 percent of all our nation’s beef cattle farms and ranches, and we’ve lost 78 percent of our industry’s marketing outlets – our feedlots. And based on data from the Department of Agriculture, during the five years prior to NAFTA, the average return to cow/calf producers on a per bred cow basis was nearly 22 percent higher than their returns during the past five years (2018-2022), a period when beef and cattle exports were higher than any time in history, averaging about 3.2 billion pounds per year during those past five years.
I would suppose that the beef industry has a different definition of prosperity that it uses to fuel its undying support for globalism’s free trade. But looking at the results from the cattle producers’ perspective, free trade did not bring about prosperity – not under any normal meaning of the word. Instead, it has brought about the dismantling of our U.S. cattle industry.
So beware, the beef industry is going to try and spin the story of beef trade in an attempt to secure the public’s support for the status quo, meaning to ensure that no changes are made to the United States’ three-decade-old trade policy.
And here’s how the beef industry will do it. The beef industry won’t acknowledge that the trade in live cattle directly impacts the calculation of how much beef is actually imported and exported, so it will focus only on the trade of beef, the commodity, and not the beef that arrives in the form of live cattle.
For example, the beef industry will report the total volume of beef imports for 2023 at 3.7 billion pounds and the total volume of beef exports at 3 billion pounds, meaning the U.S. imported only about 70 million pounds more than was exported. This is based on using the USDA’s trade data that is based on a 1,000-pound carcass weight.
But remember, the beef checkoff program regularly converts the commodity beef to a live cattle equivalent in order to charge importers the mandatory $1 per live animal checkoff assessment. Similarly, we must convert live cattle to the commodity beef equivalent in order to have a complete and accurate accounting of beef trade.
So, using the average 2023 carcass weight as the conversion factor, the roughly 2 million head of imported cattle would produce 1.6 billion pounds of beef. And the roughly 350,000 head of cattle we exported would have been the equivalent of about 290 million pounds of beef.
Thus, in 2023 we actually imported 5.3 billion pounds of beef while exporting only 3.3 billion pounds of beef, leaving the U.S. awash with about a 2 billion-pound deficit in the trade of beef. And, again, this is based on the widely used USDA’s 1,000-pound carcass weight standard.
The importance of this discussion is this: We cannot expect to reform our nation’s current trade policies that are dismantling our industry if decision makers are being provided with only a partial accounting of our beef trade. A complete and accurate accounting of beef trade reveals that the domestic cattle industry is being injured because the U.S. consistently imports more beef than it exports, leaving the U.S. awash with a price depressing trade deficit.