cCordingley: Trade plays major influence in stability, future of beef cattle herd
“The biggest opportunity in the U.S. beef industry in the future and for the beef producer lies in opening and developing export markets,” commented Bill Cordingley of Rabobank Wholesale Banking North America in a presentation at the National Cattlemen’s Beef Association Cattlemen’s College, held on Jan. 30 in New Orleans, La.
Cordingley noted the clear trend shows growth around the world.
China’s growth has reached higher than six percent per year, with 300 million consumers that would be classified as wealthy and able to afford quality food.
“Indeed, these people want beef,” Cordingley said. “Food safety is a huge issue in China, too, and the same goes for southeast Asia, Europe and many other small markets.”
As a result, the opportunity to provide safe, quality American beef to consumers around the world could yield big dividends for the U.S. beef industry.
Export development
“The beef industry in the U.S. has always exported high-value beef to wealthy markets around the world,” he continued, adding that the American export business is built on not only quality but also low cost.
“However, I believe these markets have yet to be fully developed,” said Cordingley. “Being focused on these opportunities involves reducing the barriers to trade, developing the supply chain and consumer demand in these important markets – all of which will be rewarded over time.”
Building markets is critical to harnessing export opportunities, Cordingley emphasized.
“Trade is complicated. Access has always been hard and subject to politics, as we have seen this year,” he said. “This leads to sensible, rational business people to not over-invest in markets that can be here one day and gone the next.”
“We need to find a way to do better in our ability to export because the consumers of the future will increasingly be outside of the U.S.,” Cordingley continued.
Competition
With export challenges abundant, Cordingley said the U.S. has one significant advantage.
“The good news for the U.S. is there are only a few significant competitors for U.S. beef, especially when we look at our high quality grade,” he explained. “Only a few countries produce exportable volume for high-quality beef in quantities that meet the demand of export markets.”
Canada, Australia, New Zealand, Argentina and Brazil are the most significant direct competitors for U.S. beef, and Cordingley said these countries have limited means to increase the volume of beef they produce.
“The possible exceptions are Argentina and Brazil, which may be able to grow,” he said. “They all have the capacity to improve quality and challenge U.S. markets.”
Access
At the same time, some U.S. beef producers are at a disadvantage when it comes to access.
The two largest world markets – China and Europe – are virtually closed to U.S. beef, explained Cordingley, who noted both markets are key to U.S. growth and the future.
“If these access issues can be improved or resolved, there is significant upside,” he said. “The U.S. cannot afford to miss these export market opportunities.”
Tariff barriers, such as those in Japan, put the U.S. at a major disadvantage, and unless trade agreements can be negotiated and finalized, the U.S. is likely to struggle in those markets, which is a step in the wrong direction,” Cordingley emphasized.
Big picture
“Today, exports represent 12 percent of total U.S. beef production, and we’re moving toward 15 percent,” Cordingley said. “Exports contribute well over $300 per head. This could represent 20 percent of production – and much more in value – over the next five years.”
He emphasized, “We need to harness the tremendous opportunity in southeast Asia, Indonesia, Vietnam and the Philippines, who have emerging consumers and the increasing ability to be able to purchase U.S. beef.”
Saige Albert is managing editor of the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.
