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One Year Back into the Market, U.S. Beef Faces New Challenge in China

Published: Jun 25, 2018
00:00 / 00:00

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It has been just over one year since China reopened to U.S. beef after an absence of nearly 14 years. The U.S. beef industry has made progress in establishing a customer base in China, but is about to face a steep challenge - an additional 25 percent retaliatory tariff, which will raise China's total import duty rate on U.S. beef to 37 percent.

Joel Haggard, U.S. Meat Export Federation (USMEF) senior vice president for the Asia Pacific, explains that the threat of these duties has already had an effect on customer interest in U.S. beef, and he expects the volume entering China to decline once the higher duty rate takes effect (which is likely to be July 6). But Haggard adds that USMEF will continue to assist customers and promote U.S. beef in China, because the market still holds excellent long-term potential.

In the second half of 2017, following reopening of the market, U.S. beef exports to China totaled about 3,000 metric tons valued at $31 million. Through April of this year, exports were just under 2,300 metric tons valued at $21.3 million.

TRANSCRIPT:

Joe Schuele: In this U.S. Meat Export Federation report, Joel Haggard, senior vice president for the Asia Pacific, discusses the additional 25 percent duty China will soon impose on imports of U.S. beef:

Joel Haggard: It's almost been a year exactly since U.S. beef shipments hit the market in China after a 14-year absence, and although re-establishing a foothold in the world's fastest-growing beef market has not been easy, progress has definitely been made and there's a small but growing customer base for U.S. beef. But June 16, China's ministry of finance published a more definitive threat to impose duties on a wide range of agricultural products including beef as early as July 6. The threat of duties has caused a noticeable slowdown in both U.S. beef importing activity but also more importantly a slowdown in the interest by some of our loyal restaurant and retail partners to feature U.S. beef. I think owners and operators are nervous not just about supply reliability after an additional 25 percent duty is imposed, and of course the pricing, but they're also concerned about consumer response especially if the war of words on the trade front escalates further.

Joe Schuele: Once the higher duty takes effect, Haggard expects a significant impact:

Joel Haggard: U.S. exporters can't be expected to lower prices by the extent of the duty because alternative markets exist for the U.S. beef products being shipped to China now, such as ribeyes, short ribs, chuck rolls, other steak cuts, etc. So it really means we face the prospect of a significantly lower flow of beef coming into the marketplace here, and very likely the loss of existing U.S. beef accounts ranging from Korean barbecue restaurants to steakhouses and supermarkets. This is all very regrettable because the U.S. beef industry has put a lot of effort and capital into getting things kickstarted over here over the last year, but we'll continue to support our loyal customers regardless of any larger turmoil and uncertainty as we still believe China offers incredible long-term potential to the U.S. beef industry.

Joe Schuele: For more information, please visit USMEF.org. For the U.S. Meat Export Federation, I’m Joe Schuele.

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The U.S. Meat Export Federation (www.USMEF.org) is the trade association responsible for developing international markets for the U.S. red meat industry. It is funded by USDA; the beef, pork, lamb, corn and soybean checkoff programs, as well as its members representing nine industry sectors: beef/veal producing & feeding, pork producing & feeding, lamb producing & feeding, packing & processing, purveying & trading, oilseeds producing, feedgrains producing, farm organizations and supply & service organizations.