China reopened to U.S. beef in 2017, but technical restrictions kept the cost of producing and processing China-eligible beef very high and made it difficult for the United States to gain market share. Travis Arp, USMEF senior director of technical services/access, says the U.S.-China “Phase One” trade agreement signed last week will ease or eliminate many of these restrictions and expand opportunities for the U.S. beef industry. He notes that China has committed to following international standards regarding hormone use, modifying its traceability requirements and removing the 30-month cattle age limit.
Arp explains how this will lower the cost of producing U.S. beef for the Chinese market, which is especially important because China still imposes retaliatory duties on U.S. beef. The total tariff rate for U.S. beef cuts is 47% compared to 12% for most other suppliers, 5% for Australian beef and zero for New Zealand beef.
Joe Schuele: Since China reopened to US beef in 2017, the U.S. has captured only a small percentage of the world’s largest and fastest growing beef import market. The U.S. China phase one trade agreement could change that as explained in this U.S. Meat Export Federation report. Here’s Travis Arp, USMEF Senior Director of Export Services/Access.
Travis Arp: The changes in the sanitary and phytosanitary barriers for beef access to China are really significant because this opens up a much larger percentage of the cattle population to now be eligible for China. Removing the hormone restrictions and adopting international standards for hormone residue limits, it’s going to drastically increase the number of feed lot cattle that qualify for the China beef supply and then along with changes and traceability removing the age requirements for cattle and the product scope is really going to open up our opportunities in China for U.S. beef.
Joe Schuele: China still imposes retaliatory duties on U.S. beef putting it at a price disadvantage. But Arp says the changes included in the agreement will make U.S. beef affordable to a wider range of Chinese customers.
Travis Arp: Absolutely, when you think about the production gains that we’ll get from being able to utilize hormones and production technologies as well as just the cost savings from not having to operate these specific China programs, that’s going to really bring down that premium we were seeing for U.S. beef going into China because of those factors. Operationally when you don’t have to segregate the carcasses and the cattle for these very specific requirements, it increases the efficiency within production it simplifies how plants have to handle those cattle and carcasses and really ends being not only a cost saving from a production standpoint but also operationally within the plants in the U.S.
Joe Schuele: For more information, please visit USMEF.org. For the U.S. Meat Export Federation, I’m Joe Schuele
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. USMEF complies with all equal opportunity, non-discrimination and affirmative action measures applicable to it by contract, government rule or regulation or as otherwise provided by law. USMEF is an equal opportunity employer and provider.