The Aug. 1 announcement by the U.S. Department of Agriculture regarding an agreement with Brazil in relation to beef imports has many producers wondering how it will impact their bottom line.
The agreement opening up the boarders was reached after the USDA said its Food Safety and Inspection Service determined that Brazil’s food safety system for meat was up to U.S. standards and that fresh (chilled and frozen) Brazilian beef can be safely imported. Brazil currently imports cooked and canned beef to the U.S., and is the largest exporter of beef in the world.
The agreement also allows U.S. beef and beef products to be exported to the Brazilian market for the first time since 2003, due to the United States’ negligible risk classification for bovine spongiform encephalopathy (BSE) by the World Health Organization for Animal Health.
Cattle prices in the U.S. have taken a dramatic tumble since last year’s record highs, so the opening of beef markets to Brazil has caused some to question if prices will see another fall. According to a statement from USDA Public Affairs Specialist of the Foreign Agriculture Service Bob Ellison to Ozarks Farm & Neighbor, if there is a drop, it will be only a slight one.
“We’ve done calculations that show if the United States were to import 40,000 mt (metric tons) of beef from Brazil, total U.S. beef imports would increase by less than 1 percent,” the statement reads. “Due to the increase in supply, it is estimated that the wholesale price of beef, the retail price of beef and the price of cattle (steers) would decline by less than 1 percent. Changes in U.S. beef production, consumption and exports in response to these very small price declines would be inconsequential: Beef production would decrease by 0.01 percent, beef consumption would increase by 0.06 percent, and beef exports would increase by 0.11 percent. The 20,000 mt and 65,000 mt import scenarios show similarly small quantity and price effects.”
The U.S. has agreements with other cattle producing countries, such as Australia, New Zealand, Argentina and Uruguay. Ellison said the agreement with Brazil will not have an impact on those relationships.
“After a rigorous review of Brazil’s food safety and animal health regimes, (the) USDA approved the import of Brazilian fresh/frozen beef to the United States,” the statement said. “The United States review was conducted in accordance with U.S. legislation. As this process is separate from trade agreements, it will not impact our agreements with other countries. Brazil beef will now be under the same TRQs (Tariff Rate Quoats) as other countries which do not have FTAs (Free Trade Agreements) with the U.S., but which do have beef equivalence.”
TRQs are assigned to countries exporting product to the U.S., who do not have free trade agreements. Since Brazil does not have a country specific quota to export to the U.S., they will be classified in the TRQ group labeled “Other.” The maximum volume of this group is 64,805 mt.
The United States is the largest producer of beef in the world, but also imports more beef than any other country, which Ellison and the USDA credited to the tastes of the U.S. consumer.
“U.S. consumers have varying preferences for beef and international trade allows increased choices for U.S. consumers,” the statement to OFN reads. “U.S. producers specialize in raising high-value, grain-fed cattle, while the beef the United States imports from other countries is mainly lower-value, grass-fed, lean product that is processed into ground beef. Overall, imports accounted for nearly 14 percent of U.S. beef production in 2015, while exports accounted for about 10 percent.”
The USDA is hoping to capitalize on the agreement by sending grain-fed beef to Brazil. Ellison’s statement said it is difficult to estimate U.S. shipments to Brazil, but the USDA is looking forward to increased trade and cooperation in beef trade with Brazil which will benefit consumers in both countries.
“The United States looks forward to providing its 200-million-plus consumers, a large percentage of whom are middle class, with high-quality American-grown beef and beef products,” the statement said.
Exports could begin in 90 days.
