Background: A previous column focused on the issue of feeder cattle imports. Bottom-line, they’re not really a market maker—what really matters is consumer spending.
But anytime the issue of cattle imports arises, the protectionists will point to beef imports (and if the issue is beef imports, then they remind you about cattle imports).
And then it gets conflated with other issues. For example, RCALF recently posted this on Meta: “Industry concentration is facilitated when concentrated beef packers access undifferentiated, lower-cost imports and use them as direct substitutes for U.S.-produced beef, thus reducing demand for cattle raised by American cattle farmers and ranchers.”
Never mind that Protectionists Make Bad Bookkeepers. For this column, let’s run with the issue of beef imports.
Imports vs Non-Fed Beef: During the first six months of the year, the U.S. imported a record amount of tonnage: 2.21B lb. That’s up nearly 19% (or ~+350 M lb) versus ’23. At first blush, that sounds alarming; maybe the protectionists are on to something?
But let’s super-impose that against non-fed beef production - down nearly 297 M lb for the first half of the year. Putting those together, the difference of imports (+350 M lb) and non-fed beef production (-297 M lb) nets the business +53 M lb of mostly lean trimmings (to make ground beef) in ’24 versus ’23.
That extra trim supply is especially important considering fed beef production is nearly 98 M lb ahead of last year’s pace through June – that means more 50/50 trim that needs to be blended to make ground beef.
How Many Bites?: Consider the U.S. population on Jan 1 was 335.9M people. Therefore, the marginal non-fed plus imports beef supply (+53M lb) is the equivalent of about .16 lb per person or 2.56 oz; that’s roughly half of a hamburger over the first six months of 2024.
There’s a whole thing on Reddit about how many bites are required to eat an average hamburger. Let’s go with six. This year’s extra beef works out to just three extra bites per person over a six-month period. I’m not sure imports are really “flooding” the market.
Bigger Picture: But what about the longer-run relationship between beef imports and non-fed beef production? There are two charts below that tell that broader story:
1. Chart 1 details year-over-year differences between the two measures in the Jan-thru-June time period – thus providing some context for 2024. The trend is solid. That is, the lean-trimming sources are largely interchangeable; the slope is nearly 1-for-1 (-.8639). More non-fed beef? Less imports. And vice-versa. Again, all that represents the first six months of the year when imports are front-end loaded (for more on this see USDA’s discussion of import patterns here).
2. Chart 2 provides the full-year comparisons thereby removing the noise of import volume on the front half of the year. The correlation between the two variables – imports and non-fed beef production – is -.83! Moreover, the two sources of lean trimmings are nearly perfectly interchangeable: for each 1 lb change in non-fed beef production, imports change 1.08 lb in the opposite direction.
Beef Trade Propaganda: The protectionist camp wants us to believe international trade is the peril of the beef industry. To that end, Dr. Andrew Griffith (University of Tennessee) recently provided some excellent discussion entitled Beef Trade Propaganda. He notes that, “If cattle prices increase or decrease, it is highly unlikely international beef trade was the sole influencer in either direction. International trade certainly influences the domestic market, but in most instances, it is a market price supporter and provides incentive to produce higher quality beef.”
That’s PRECISELY right! International trade (imports and exports) enables the industry to specialize on what it does best—produce high-quality beef. And because that proves price supportive, contrary to the protectionist propaganda, producers are indeed beneficiaries of that reality.
Nevil Speer is an independent consultant based in Bowling Green, KY. The views and opinions expressed herein do not reflect, nor are associated with in any manner, any client or business relationship. He can be reached at nevil.speer@turkeytrack.biz.
