Rachel Spencer Gabel
for The Fence Post
March 9, 2018
In a press release, R-CALF announced the recent unanimous vote of their board of directors to urge President Trump to impose new tariffs on cattle, beef, sheep and lamb imported from countries that maintain substantial trade surpluses with the U.S.
The tariffs, according to Board President Bryan Hanson, are necessary to “preserve national food security interests that are threatened by a growing tide of underpriced and often undifferentiated imports.”
James Robb, center director of Livestock Marketing Information Center, said R-CALF’s call is well-timed but may lack a broader view of international trade. The reality, he said, is that international trade isn’t merely a country to country analysis. While the U.S. imports more lamb than it exports, and it is a point of concern, he said it may not be a true measure of the industry’s health.
In terms of lamb and sheep markets, Robb said lamb imports have increased but as China’s demand grows, they will continue to take additional market share of New Zealand and Australia’s exports.
“It’s hard to point to subsidies in New Zealand as they don’t offer any at all,” Robb said.
The majority of beef imported from those countries are primarily lower value cuts rather than steaks and tenderloins, he said. Beef imported from Mexico tends to be middle meats, allowing Mexico to retain the lower value cuts in their own country in addition to importing low-quality cuts from the U.S.
The total dollar value of U.S. beef industry exports, which includes beef cuts popular in the U.S., organ meats that are unpopular in the U.S., hides, tallows, and other products, Robb said, is still higher in total dollar value than the dollar value of imports.
“That is not a well-told story,” he said. “The only way I can put all of this — whether it’s feeder cattle from Canada or U.S. exports of liver — in the same units is to put them in dollars and cents. You can do that based on trade data.”
Retaliation is a risk of imposing tariffs, Robb said. Other countries may choose to retaliate in different industries which, in turn, could help the economies of other beef producing countries grow at the disadvantage of the U.S.
“I suggest looking at a broader picture of the industry value,” Robb said. “Some countries are subsidizing their industries more than the U.S. but that’s not happening in every country. The surge in lamb and sheep exports, some of that due to the value of the dollar, raises a flag that should cause us to question whether we are that uncompetitive in lamb production in the U.S.”
According to R-CALF’s press release, the implementation of NAFTA coincides with the displacement of over half of U.S. lamb production, leaving the industry devastated.
“That has nothing to do with NAFTA,” Robb said. “Australia and New Zealand is where all the lamb comes from. That’s a correlation but that’s not causation. We export far more lamb products to Mexico than we would ever buy from them.”
Travis Hoffman, Ph.D., Extension sheep specialist at North Dakota State University and the University of Minnesota, said despite increased imports, the sheep and lamb industry has experienced five years of steady demand. Imports of lamb products have, Hoffman said, increased as the U.S. lamb industry can not provide an adequate number of lambs to merchandise to our American consumers. Australia and New Zealand maintain a greater market share than a decade ago due to U.S. production versus consumption.
The increase in exports from New Zealand and Australia, Hoffman said, are not due to a lack of food safety or cutting corners but to a difference in cost of production.
“It’s cheaper to raise lambs on the deserts of Australia than the corn fields of Iowa,” Hoffman said. “There is a difference in terms of price but I’m not sure tariffs are the answer.”
In their press release, R-CALF expressed concern over the weakening of America’s rural economy through the loss of farmer-feeders raising their own feed for their cattle. Douglas Cody Jolly, Colorado Independent Cattle Growers president, hopes the tariffs could signal a change in this trend.
The tariffs could mean stabilized commodity prices that would benefit young producers attempting to return to production agriculture, according to Jolly. Additionally, the return of young producers could signal the growth of family ranches.
“Our agricultural workforce is aging and we need to work to get young people into agriculture,” Jolly said. “One of the things that’s going to have to take place is some kind of stable commodity prices.”
The ability to make ends meet, he said, as well as making enough revenue to reinvest in the operation and in additional real estate is crucial to the success of young producers. The tariffs could provide that stability and predictability and ease the way for young farmers and ranchers.
— Spencer Gabel is a freelance writer from Wiggins, Colo., where she and her family raise cattle and show goats. She can be reached at email@example.com or on Facebook at Rachel Spencer Media.