Disclaimer: This is the third column (see one and two) grappling with some of the claims regarding international trade. And while it’s always been a contentious issue, the rhetoric has seemingly been amplified in recent months. Like the disclaimer noted in the first column, none of the discussion that follows should be interpreted as commentary extending to broader political issues and/or candidates.
Such a disclaimer is especially pertinent, because when it comes to trade, the U.S. beef industry stands alone on two separate fronts. Domestically: it’s difficult to identify a comparable industry that holds such a solid competitive position in the global marketplace. Internationally: no other country is able to match the U.S. beef industry’s dominant ability to readily source large volumes of high-quality beef.
USDA Trade Policy: That said, there’s a floating narrative out there that often condemns the presence of international trade – while baffling, it’s often positioned as a detrimental influence on the business. For example, RCALF recently proclaimed that USDA’s trade policies are hurting ranchers. The ranch group claiming: “…hundreds of millions of dollars in economic injury inflicted on America’s ranchers by the USDA’s trade policies have contributed greatly to what we learned in the 2022 census – and that is that during each of the past five years, on average more than 21,000 American ranchers have quit ranching, with a total loss of ranchers of 107,000 during that short period.”
The series’ first column countered that contention by highlighting the beef industry’s fiscal trade surplus. The second column further debunked the claim by demonstrating beef imports have neither hindered the fed market nor influenced beef cow inventory. But that leaves us with a third item to consider – namely imports of live animals. Maybe that’s detrimental to beef producers?
Facts Are Stubborn Things: There are two sets of data detailed below.
- Fed cattle: The first graph details the relationship between annual changes in the fed market (inflation adjusted) and annual fed steer / heifer imports. Here’s what’s most important – the regression line is essentially flat; even in those years when imports exceeded the prior year, the subsequent influence on the fed market was negligible. (Note also the COOL years – the absence of any trend is telling.)
- Feeder cattle: Now let’s turn our attention to feeder cattle. The anti-trade narrative goes something like this: too many feeder cattle are being imported into the U.S. and subsequently compete with domestic cow/calf producers, thus driving them out of business. What about that? The second graph demonstrates there’s simply no evidence to back that up. The regression of change in cow numbers versus feeder cattle imports is flat (the covariance is essentially zero).
Dr. Rick: Everyone loves the Progressive insurance ads with Dr. Rick. You know, “Maybe Progressive can’t help you from becoming your parents, but we can protect your home and auto when you bundle with us.” My favorite one is the “social listening” commercial. Dr. Rick asks at the end, “Okay, do you really think we need 47 photos of fun dinner at Pam’s?” And Pam enthusiastically responds, “Yes!” Dr. Rick immediately counters, “No.”
Now envision Dr. Rick at the coffee shop talking about this data. He asks, “Do you really believe international trade is driving producers out of business?” Straightaway, one cowboy enthusiastically responds with, “Yes!” Just like the ad, Dr. Rick then counters with, “No.” Maybe Progressive can’t help you from becoming a protectionist…
Persistent Misunderstanding: In all seriousness, Drs. Glynn Tonsor (Kansas State University) and Derrell Peel (Oklahoma State University) describe it best in their white paper entitled, “Assessing Economic Impact That Would Follow Loss of U.S. Beef Exports & Imports.” They summarize the importance of international trade like this:
…the economic importance of beef exports and imports is substantial and growing with time. In the absence of beef trade, the entire industry would shrink significantly.
Most significant, subsequent to the critical nature of trade, Tonsor and Peel also implore their readers to be discerning students of the trade data influencing their business; sifting out the noise and meaningless talking points related to trade policy:
Given persistent misunderstanding [emphasis mine] and market dynamics in the global marketplace, periodic updated assessments are encouraged.
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.
