I am a member of the South Dakota Stockgrowers Association, which recently disaffiliated from the National Cattlemen's Beef Association. Instead, the group aligned itself with R-CALF (Ranchers-Cattlemen Action Legal Fund), which was organized to fight imports of cattle into the U.S.
As I visit with people about this switch, a few questions always arise that I am unable to answer.
Why does the U.S. import cattle and beef from foreign countries? Is it because we are unable to fill existing markets with domestic beef?
What are the imports used for mainly? Are they used for low-cost beef products?
Do we want U.S. beef to be used for what the imports are used for? If yes, would it hurt our prices if U.S. beef were used for these purposes?
Kory M. Bierle
Harlan Hughes responds: I will answer your last question first. We generally import low-quality beef that goes to the variety meats, lunch meats, etc. We also import cow meat to be ground into hamburger meat. By doing that, we can divert our domestic beef to the higher priced export beef.
If we decided to meet all domestic beef demand with domestic production, we would have to divert much more of our high-quality beef to produce low-quality product. That would drag down average domestic cattle prices. We all gain by the substitution of low-quality imported beef for the export of our high-quality beef.
Understand that the size of the U.S. beef cow herd is 33 million beef cows. Canada has only 4.5 million beef cows. That's a ratio of 7 to 1. In fact, Texas has more beef cows than all of Canada.
Not all beef imports, however, are low quality. Some Canadian grain-fed beef comes in — especially out of Alberta. We also export some beef to Canada — particularly in the East where the majority of their population is.
Economic trade generally works best for countries that allow imports because then they get to export. If the U.S. were to shut off imports with trade restrictions, other countries would respond in kind.
We import more total pounds from all countries than we export, but the dollar value of what we export to all countries exceeds the dollar value of imports.
Since the trade blockade, we are exporting more feeder cattle to Canada. Most of the 2000 feeder calves that went north came from Montana, Idaho, North Dakota, etc. North Dakota cattlemen are closer to the Alberta feedlots than the Central Plains feedlots. It makes some sense for North Dakota feeder cattle to go into Alberta, but we have to really watch the Canadian dollar's value.
A big factor in the Canadian trade has been the reduced value of the Canadian dollar. Their cattle are priced right off of U.S. markets. In fact, Alberta feedlots will quote their prices as Nebraska direct slaughter price minus a $6-$8 basis.
As the Canadian dollar weakens, their beef prices go up. Transportation makes up much of the $6-$8 negative basis.
The high value of the dollar has pulled in beef imports from all over the world. Probably one of the biggest factors influencing Canadian imports is the strong U.S. dollar. The strong dollar over the last few years has been a real challenge to agriculture, in general.
The U.S. dollar is starting to weaken so that may correct over time. Agriculture needs a weak U.S. dollar so that we can export more. U.S. grain producers are particularly impacted with the strong U.S. dollar. Our domestic grains are too expensive to export.
Beef export demand, on the other hand, seems to be growing each year. I hope that the beef industry does not mess up our beef export opportunities as beef exports are a shining light for grain-fed beef.
I have a full paper on the Canadian-U.S. Trade Impact on my Web site at www.ag.ndsu.nodak/cow. Click the “New” button and you'll find the paper at the top of that list. You will need Adobe Acrobat reader to get it but you can download Adobe free by clicking on the icon on that page.
We Appreciate The Support
Thank you for the positive March issue editorial (“5 years worth of difference,” page 4). You have always been a strong supporter of the beef industry, but it's the way you can sum it all up in two columns that is so amazing.
We can't tell you how many times we've used your magazine when speaking to groups. Your observations are right on the money and you always do your homework.
We both came away from the meeting in San Antonio with some of the same perceptions. It has been a while coming, but we believe the industry is seeing some of the fruits of the voluntary leadership and the staffs of CBB and NCBA. As you said, it's an amazing transformation.
We can attribute some of it to keeping our eye on the ball. Being focused on the consumers' needs and respecting the research on the trends of the consumer has kept us in the ball game. In some cases, we are hitting homeruns, such as being the catalyst for new convenient products using the chuck and the round.
John and Dee Lacey
Paso Robles, CA
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