Commentary by Bill Bullard, CEO, R-CALF USA
The U.S. Senate just passed a resolution of disapproval to stop the U.S. Department of Agriculture (USDA) from implementing a trade policy the agency estimated would injure American ranchers by up to $24 million annually. But history tells us the USDA is notorious for grossly understating the economic injuries its trade policies are causing American ranchers.
The recent Senate action was a resolution disapproving the USDA’s final rule allowing the importation of fresh beef from Paraguay. The Senate resolution of disapproval, which passed by a 70 to 25 vote, made history – it was the widest margin of victory on a resolution of disapproval vote in the Senate’s history.
One of the big problems with the final rule is that Paraguay is not free of foot-and-mouth disease, one of the most contagious diseases known to cattle, hogs, sheep and other two-toed animals, including wildlife.
Little is being said about the other big problem, that of causing long-term economic injury to America’s ranchers. So let’s focus on this.
Here’s what the USDA said about the economic injury the final Paraguay rule was expected to exact on ranchers:
“[C]onsumer gains of $14 million to $27 million would outweigh producer losses of $12 million to $24 million, yielding annual net social welfare gains of $1.6 million to $3 million.”
In other words, a key part of USDA’s trade policy is to invite more beef imports into the United States even though those imports are fully expected to cause economic injury to America’s ranchers. The deciding factor used by the agency is whether the theoretical benefits it monetizes for consumers by having a larger supply of beef in the domestic market exceeds the expected loss to producers.
Now that we know the basis for the USDA’s trade policy, let’s look at the agency’s track record.
About a decade ago the USDA issued a final rule to allow fresh beef from Brazil, which is yet another country not free of foot-and-mouth disease. In that final rule, the USDA found that American ranchers would suffer an economic injury of $143 million, but the agency concluded that was okay because they theorized that consumers would benefit more, thus offsetting the injury to cattle producers.
Importantly, this expected economic injury to cattle producers was based on the USDA’s assumption that the U.S. would annually import 40,000 metric tons of beef from Brazil.
The USDA grossly understated the amount of beef its new trade policy would invite from Brazil. During the past four years (2020-2023) the U.S. imported on average 113,000 metric tons of beef each year from Brazil, which is nearly three times the amount of beef the USDA estimated it would take to cause $143 million in economic injury to America’s ranchers.
Since the USDA expected American ranchers to suffer $143 million in losses each year for every 40,000 metric tons of Brazilian beef imported, then it’s safe to say that during the past four years, American ranchers likely suffered an economic loss of well over $400 million each year since the actual amount imported from Brazil was nearly triple what the USDA had assumed.
The USDA did the very same thing with its final rule to allow fresh beef from yet another country not free of foot-and-mouth disease – Argentina. In that final rule the USDA expected to cause an economic injury of nearly $8 million to American ranchers based on its assumption that the U.S. would import 20,000 metric tons of beef each year. But during the past four years, Argentinian beef imports averaged over 2,000 metric tons more each year than the USDA had assumed.
It’s important to note that USDA’s trade policies provide no opportunity whatsoever for American ranchers to recoup any of the losses the USDA has been knowingly and willingly inflicting upon them, while at the same time increasing the risk of introducing a debilitating disease into the United States.
Clearly, these hundreds of millions of dollars in economic injury inflicted on America’s ranchers by the USDA’s trade policies have contributed greatly to what we learned in the 2022 census – and that is that during each of the past five years, on average more than 21,000 American ranchers have quit ranching, with a total loss of ranchers of 107,000 during that short period.
This is why the Senate’s resolution of disapproval is so important. It’s the first time ever that Congress has taken action to stop the USDA from inflicting serious economic injury upon America’s ranchers.
The resolution of disapproval must now be passed in the House of Representatives. So please call your U.S. Representatives immediately and urge them to vote “Yes” on the resolution of disapproval that will reverse the USDA’s final rule to allow fresh beef imports from Paraguay.