Exports Rule

Written by Dennis Sun

These days, as all in agriculture realize, exports are very important. Whether it is beef, grains, sugar or vegetables, exports really help the markets. We’ve talked a lot about exports in this column in the past few months, and I view exports as very important to our ag economy.

According to CattleFax, America exports around 2.5 billion pounds of beef and beef offal to other markets around the world every year, and that figure will only go up as populations and the standard of living increase worldwide.

The 500-pound gorilla in the room is trade agreements. Some are uneasy with President Trump over trade agreements, as he has signaled that he likes bilateral trade agreements instead of the big trade agreements like the Trans-Pacific Partnership (TPP). In today’s world, a bilateral trade agreement may be easier to agree on, with just two countries involved, but there are some huge trading partners out there.

Not many of us are aware of this, but India is the largest beef trade exporter in the world. One has to use the word “beef” cautiously in this case, as they’re not marketing good beef. Rather, India exports water buffalo, and water buffalo just doesn’t compete with America’s good beef.

In 2016, according to CattleFax, India, Brazil and Australia, all exported more beef than the United States, with New Zealand next in line. All of these countries export beef to other countries that the United States also wants to sell to, so we see competition. We do have an advantage over the other countries in our quality of beef, but if all those millions of people are satisfied with water buffalo, we’re up against that issue, too.

If we just take Hong Kong, for instance, with its millions of residents, 55 percent of their beef comes from Brazil and only 20 percent from America. Australia and New Zealand follow, exporting 3.6 billion pounds of beef to Hong Kong. Just think, if the U.S. could increase exports just to Hong Kong by 10 or 20 percent, how many pounds of beef would that be? The number of people in these Asian countries is huge, and hopefully, they are tired of duck, chicken, fish and, more importantly, water buffalo.

Now we are hearing that Japan wants to revive the Trans-Pacific Partnership, maybe without the U.S. That would be terrible for the U.S. but good for Japan. How bad it will be for the U.S. is something only time will tell. That also depends on how soon we get our trade agreement finalized with Japan.

When President Trump met with the Chinese President Xi Jinping a while back, they agreed to a 100-day plan for trade talks. That is a sign Washington wants some fast results. Japan and their 11-member TPP will have a hard time beating that time frame, or we at least hope so.

Japan aims to have TPP ministers meet in Vietnam in late May to agree on how to make the revamped TPP work without the U.S. It is important also to bring in Vietnam and Malaysia into their group, so we can only hope they take their time.

At some point, traceability in our cattle will be an issue, especially with China. I wonder how traceable those water buffalo from India are?