During his Senate hearing to be confirmed as ambassador to China, then-Gov. Terry Branstad said he would prefer to serve Iowa beef — not cuts from Australia — at the U.S. Embassy there.
He won’t get that wish yet, but the prime rib he slices into Friday when joined in Beijing by U.S. Department of Agriculture Secretary Sonny Perdue and Chinese government officials to ceremonially mark the return of U.S. beef to China after a 14-year ban will be from closer to home — Nebraska.
The meat shipped last week by a South Omaha meatpacker was reported to be the first shipment of U.S. beef to China since 2003 after officials sealed a long-sought trade deal this month.
“This is a big deal. It’s definitely very positive news,” said Lee Schulz, an Iowa State University Extension livestock economist.
But Schulz cautioned overcoming the political hurdles that had prevented U.S. beef exports to China over fears associated with mad cow disease are only the first step. It will be some time before American beef becomes “it’s what’s for dinner” for nearly 1.4 billion Chinese.
He described the Chinese market for U.S. beef as “in its infancy” in terms of its impact on Iowa and U.S. producers and processors.
The market today is “very different” from 2003, according to Chris Freland, executive director of the Iowa Beef Industry Council. Still, what she saw while visiting China earlier this year makes her believe U.S. beef producers have “an exciting opportunity” to move into the Chinese market.
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“There are a lot of people there … and a rising middle class who can add beef to their diet,” she said.
China is projected to become the largest beef market in the world and a major destination for U.S. beef products, according to American Farm Bureau Federation economist Katelyn McCullock. Adding to the market potential is China’s changing taste, McCullock said.
In 2003, much of the market there was offal — tongues, kidneys and livers, for example. Today, there has been demand for higher-value “muscle cuts” or steak.
Before China closed the door on U.S. beef, it imported $70 million worth of beef annually, with the United States supplying 80 percent of that. Today, China imports about $2.6 billion worth of beef every year. Last year, Chinese beef imports totaled 601,000 tons and demand is expected to increase ninefold in four years.
“So if we can even have a portion of that coming back for Iowa producers, that’s a celebration for producer profitability,” Freland said.
Even if Iowa beef is not going to China, the reopening of the market there still is good news for the nearly 20,000 Iowa farms with beef cattle, Schulz said.
“The fact that we’re exporting is important for the demand situation,” he said. “Beef goes to the highest value market, and if Kansas beef goes to China, then someone has to fill the need.”
Iowa’s cattle industry contributed $6.9 billion in business activity to the state economy in 2015, according to the Beef Council. With retail beef prices in decline recently, any increase in demand would be welcome, Freland said.
“Supply and demand is the way our industry works,” she said.
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China has other suppliers, though. Australia and Uruguay filled the void created when China banned U.S. beef. And Schulz said the competition won’t willingly cede the market to American farmers and ranchers.
“Anytime you regain market access, it takes time to build trade and have a noticeable impact,” Schulz said.
On the upside, he said, U.S. beef is “a very credible brand worldwide and is very desirable on the world market.”
Schulz predicted re-entry into the Chinese market is unlikely to have much short-term impact on retail beef prices here.
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