By Stan Smith, OSU Extension
Two weeks ago we discussed how COVID-19 has caused challenges for consumers and farmers alike regarding beef supply and demand. As consumers concern themselves with providing quality food for family members that are now eating more meals at home, cattlemen struggle with a backlog of finished cattle that packers can’t get harvested. That causes some to ask, “Why are we importing beef?”
At first glance it seems like a movement that resulted in American consumers eating only domestic beef would provide a simple and logical solution for both consumers and cattlemen. Under closer inspection, we find a move to no longer eat imported beef would mean our days of frequenting most fast food restaurants could be over, and the net value of our U.S. cattle would be even less. All the while, U.S. beef harvest capacity would remain at the mercy of COVID-19 and packing plant employee health.
The reality is both beef exports and imports are important economic components of our U.S. beef industry. While the reasons for exports may be obvious, at first glance the idea of importing foreign beef, especially now at a time when we have plenty of market ready cattle on the farm, might seem foolish. The reasons involve the types of beef we are importing.
While steaks and other high value beef cuts are in great demand by American consumers, we also enjoy hamburgers and other fast foods made from ground beef. In fact, it’s estimated that more than half of the beef consumed in the U.S. is ground beef, with much of it being consumed at drive-through restaurants.
While American farmers have little trouble supplying the Prime and Choice-graded steaks and other high value cuts U.S. consumers enjoy, the trim that can be ground for hamburger resulting from high quality fed cattle simply can’t provide enough of the lean beef necessary to satisfy U.S. consumer demands for hamburger. Even when the yield of cull cows is included, we still fall short of having enough lean beef trim to satisfy demand.
To meet that demand for the inexpensive ground beef enjoyed at most fast food restaurants, the U.S. imports lean beef trim rather than process more valuable domestic cuts, such as steak, into ground beef. Estimates are that at least 90% of our imported beef is inexpensive lean trim that is blended and processed with domestic beef fat originating from U.S. fed cattle, 80% of which now typically grade Choice or Prime. Without the imported lean trim to blend it with, the fat from domestic slaughter has little value and would likely be rendered.
More than balancing that trade of imported beef are the beef cuts we export to other markets throughout the world. Two examples of beef cuts that are exported due to their value to foreign consumers are the beef short plate and tongue.
Short plate is valued in the U.S. at perhaps $1.50/pound and could be ground here for hamburger. However short plate is a high demand cut in Japan where they will pay double that price. In the U.S., beef tongue might be valued at $1.00 or less per pound, yet the Japanese are willing to pay $5.00 to $10 per pound for it. On a per head basis, exporting just the short plate and tongue add $35 in value to each U.S. market beef animal. Rather than grinding those cuts into inexpensive hamburger here, they are exported for premium values. In total, U.S. exports of beef annually outpace imports by 1 to 2 billion dollars in value.
Certainly no one will ever discourage consumers from purchasing local beef. However, at the same time we must realize there remains value gained by U.S. cattlemen from a balance of beef trade that includes both imported and exported beef.