During the past several weeks, this column has zeroed in on international trade. To that end, last week’s graph featured annual value of exports versus imports.
Total export value in 2017 was just slightly ahead of $7.1 billion; a new record for the U.S. beef industry and equivalent to about $325 for every fed steer and heifer slaughtered in 2017. Meanwhile, total import value was about $5.5 billion. In other words, last year’s exports exceeded imports by $1.6 billion.
However, whenever the issue of international trade comes up, the question often arises, “Why do we even need imports at all?” That question immediately invokes the relative composition of imports. Accordingly, this week’s graph grapples with what sort of beef the United States is importing – and the reason for those imports.
To begin, Canada, Australia, Mexico and New Zealand accounted for about 87% of all beef imported in terms of quantity in 2017. As such, those countries are included in this week’s graph. The illustration highlights the relative value of imported beef from each country on a dollars per pound basis since 2000. The graph also represents average annual lean trim value in the United States.
The data provide clear evidence for what sort of beef is being imported into the United States – lean trim. In fact, the correlation between average import value and the U.S. lean trim market equals .98. Stated another way, the U.S. is predominately importing product that is tied to the lean trimmings market – and that has been consistent over time.
All that occurs 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). That provides a different context for beef imports to the U.S.; they are beneficial to domestic producers versus being a source of competitive product.
With all that in mind, what’s your perception of international trade for the U.S. beef industry? 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]