Last week’s illustration highlighted the importance of beef exports to the U.S. beef industry. Total export value exceeded $7.1 billion in 2017 – a new record for the industry. That additional revenue has a real influence on the market. The $7.1 billion value spread across every fed steer/heifer is equivalent to about $325 per head – and expressed across the 2017 average slaughter weight works out to $24 per cwt.
To that end, many producers often ask, “But what about imports? Don’t they offset the value of exports?” This week’s graph provides some further perspective into those questions – it illustrates the beef industry’s export versus import value on an annual basis.
Last year’s exports exceed import value by $1.6 billion. In other words, beef’s “trade balance” was positive and the beef industry benefitted from its trade status. The difference in 2017 was the third-largest difference on record, falling behind only 2011 and 2013. Moreover, the 2017 difference is up sharply versus 2015 when the relationship was spun around the other way: imports exceeded exports by about $800 million.
However, that dollar-for-dollar comparison is not one that tells the whole story. Rather, a majority of beef imports come in the form of lean beef trimmings for the purpose of blending with 50-50 trim to make hamburger. And from that perspective, the imports actually create value for the beef industry. Otherwise, much of that 50-50 trim would possess little value. More on all that next week.
With all that in mind, how do you perceive the value of exports (and imports) to the U.S. beef industry? What concerns do you have about the current hullaballoo around trade? Are you making any specific adjustments within your operation because of trade uncertainty? Leave your thoughts in the comment section below.
Nevil Speer serves as an industry consultant and is based in Bowling Green, KY. Contact him at [email protected]