ALEXANDRIA, Minn. - U.S. beef exports are booming, and that's good for the Minnesota cattle industry. Some part of virtually all cattle raised in Minnesota - including products such as intestines that aren't exactly popular with U.S. consumers - is sold to foreign consumers, Greg Hanes said.
But even though U.S. beef exports are on a record pace, there's concern that competitors such as Australia will benefit from trade agreements that favor their cattle producers over U.S. ranchers, said Hanes, director of international marketing and programs for the U.S. Meat Export Federation.
Hanes spoke Dec. 7 in Alexandria, Minn., on the first day of the two-day Minnesota State Cattlemen's Association annual convention and trade show. About 250 people attended.
"I can guarantee you that at least a few cuts on every one of your animals is going overseas," Hanes told his Minnesota audience. "Your consumer is not just Minneapolis. It's not just the Midwest. You're competing in the international market."
Hanes' extensive international experience includes living and working for more than a decade in Japan, the top export market for U.S. beef and beef products. Japan accounted for more than 25 percent of total U.S. beef exports of $7.3 billion last year.
U.S. beef exports have been red hot this year. Though October, they increased 9 percent to 1.13 million metric tons, with the value of U.S. beef exports rising 17 percent to $6.92 billion in the first 10 months of this year.
"We're expecting to be over $8 billion this year in exports, which will be a record," Hanes said. "I think it's a testament to the quality product we produce here in the United States. And not to blow our own horn too much, I think the relationships the U.S. Meat Export Federation have been able to create in the international markets pay dividends in the long run."
The world's growing middle class - which has both the desire and ability to buy more high-protein food such as beef - increasingly understands and appreciates U.S. beef, Hanes said.
U.S. beef exports are rising in nearly all markets with sales to Taiwan (up 36 percent in value in the first 10 months of 2018 from the same period in 2017) and the Philippines (up 35 percent in value in January-October 2018 from January-October 2017) leading the way in percentage terms.
Exports to Japan also rose sharply, reaching $1.76 billion in the first 10 months of this year, 10 percent more than in the same period last year.
Japanese consumers are buying thicker cuts of beef. They also products such as intestines that generally don't appeal to U.S. consumers, Hanes said.
Japan's own beef production has reached its maximum, so growing beef consumption there requires more imports, he said.
Tariffs a growing concern
But U.S. beef exports to Japan are threatened by the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. The agreement, often known as the Trans-Pacific Partnership, or TPP, gives lower tariffs to beef-exporting countries party to it, including Australia, New Zealand and Canada - a serious obstacle to U.S. beef producers whose exports won't enjoy the reduced tariffs, Hanes said.
In early 2017, President Donald Trump walked away from TPP, an agreement that many in U.S. ag said would have enhanced the competitiveness of American ag exports.
Hanes said Japanese customers appreciate the value and quality of U.S. beef.
But beef from Australia already enters Japan at a tariff rate or 27 or 28 percent, depending on the specific product, while U.S. beef is hit with a 38.5 percent tariff, Hanes said.
The TPP is expected to be implemented in early 2019, and Australia and other competitors then will receive an even bigger tariff advantage, he said.
"We're working hard to differentiate the quality of our product (to offset the effect of the higher tariff)," Hanes said. "So far it's been good. But at some point to we're going to hit a point where that price difference starts to be more and more important."
"We're hoping that there will be an agreement with Japan that offers us that same duty rate (enjoyed by competitors)," Hanes said.
Trump, who said he favors bilateral trade agreements, met in late November with Japanese Prime Minister Shinzo Abe. It was unclear when a trade agreement between Japan and the United States might be reached or how such an agreement would affect U.S. beef exports.