U.S. ends 13-year trade beef with China, officials say Arkansas to benefit

The Trump administration announced Monday (June 12) it has reached agreement with China on final details of a protocol to allow U.S. companies to ship beef exports to China, a move Gov. Asa Hutchinson and the state’s two U.S. senators say will benefit Arkansas and American beef markets.

As part of the U.S.-China 100-Day Action plan announced May 11 by U.S. Secretary of Commerce Wilbur Ross and Secretary of the Treasury Steven Mnuchin, Trump Administration officials said important steps were taken toward commercial shipment of U.S. beef and beef products to China for the first time since 2003.

“Today is a great day for the United States and in particular for our cattle producers, who will be regaining access to an enormous market with an ever-expanding middle class,” U.S. Department of Agriculture Secretary Sonny Purdue said in a statement. “I have no doubt that as soon as the Chinese people get a taste of American beef they’ll want more of it.”

Administration officials said the agreement is the result of the U.S.-China Comprehensive Economic Dialogue co-chaired by Ross and Mnuchin and Vice Premier Wang Yang for China.

“President Trump is doing more to improve the U.S.-China relationship than any president in decades, and this final beef protocol agreement represents even more concrete progress,” Trade Secretary Ross said in a statement. “As we clear away long-standing issues like this one, focusing on near-term, verifiable deliverables, we are building a sound foundation for further discussions.  I look forward to engaging with our Chinese counterparts as we address more complex issues to the benefit of both our nations.”

Last summer, Gov. Asa Hutchinson also met with Chinese government officials in Beijing to promote Arkansas businesses, including a discussion with high-ranking Chinese government officials on removing some trade barriers to poultry, beef and other Arkansas and U.S. agriculture products. That trip included a visit by the governor and his Arkansas Economic Development Department staff to the Chinese capital city of Beijing, where the state’s trade delegation met with the country’s vice president of agriculture and the secretary general of foreign affairs.

“Agriculture continues to be our state’s largest industry, and it’s important that our farmers are able to access growing markets like China …,” Hutchinson said in a statement. “Today’s announcement is great news for Arkansas, and this is one of the topics I raised in my meeting with the Minister of Agriculture during my last trip to China.”

In addition, Republican U.S. Sens. John Boozman and Tom Cotton of Arkansas also applauded the end of the 13-year ban on U.S. beef imports to China. In April, 39 Senators signed a letter to President Trump asking him to prioritize reopening China’s market to U.S. beef in his discussions with Chinese President Xi Jinping. It was announced in early May an agreement was reached to open China to U.S. beef no later than July 16, 2017.

“This is great news for cattle producers and ranchers in Arkansas and across the country who will be able to sell their top quality and affordable products to the growing Chinese market,” said Boozman. “For 13 years, American beef producers have been shut out of the Chinese market, and I’m pleased the Trump administration has worked to level the playing field and create an environment where Americans can compete fairly.”

Cotton added, “U.S. beef is second to none, and there’s no reason why American farmers shouldn’t be able to compete for Chinese customers. I commend the President for bringing this deal to a successful close.”

Perdue said the USDA has posted the technical requirements for its Export Verification program for U.S. establishments shipping to China, which will enable packers to apply for approval to export to China. The USDA Food Safety and Inspection Service (FSIS) has also updated its online Export Library specifying China’s requirements for certifying commercial shipment of U.S. beef and beef products to China for the first time since 2003.

Over the past few years, China has emerged as a major beef buyer with imports increasing from $275 million in 2012 to $2.5 billion in 2016. However, the U.S. has been banned from China’s market since President George W. Bush was in office.

According to industry data, the U.S. is the world’s largest beef producer and fourth-largest exporter, with global sales of more than $5.4 billion in 2016. Until the ban took effect, the U.S. was China’s largest supplier of imported beef, providing 70% of their total intake.

Two months ago, Stephens Inc. analyst Farha Aslam said the greater China region which includes China, Hong Kong and Vietnam is valued as a $7 billion market.

Japan remains the top destination for U.S. beef exports with 25.7% of total beef exports in 2016, according to Derrell Peel, livestock marketing specialist at Oklahoma State University. South Korea is the second largest beef export market for the U.S., up 26.5% in the first two months of the year compared to the same period in 2016. Peel said South Korea has grown its share of U.S. exports for the past four years reaching 17.8% in 2016.

Mexico is third largest beef export market, up 25.8% year to date, according to Peel. He said beef exports to Mexico have decreased in recent years but did show a year over year increase of 8.6% in 2016. Canada is the fourth largest market for U.S. beef and exports rose 17% compared with the first two months of 2016. Canada’s share of beef exports has also declined in the last five years with a 2016 share of 12.1% of total exports.

Hong Kong has had a larger share of U.S. beef exports in the last four years but dropped from the previous year to 11.5% of total exports in 2016. Beef exports to Hong Kong so far in 2017 are down 23.6%. The top five markets for U.S. beef comprised 83.7% of total beef exports in the first two months of 2017, the OSU beef expert said.

Springdale-based Tyson Food’s beef division slaughters an average of 125,000 head per week, which is then processed in its eight beef packing facilities. As of June 2016, Tyson had 24% of the U.S. beef market share, JBS USA was next with 22% and Cargill held a 19% market share.