USMEF's Erin Borror says Just Implemented US-Japanese Trade Deal Puts US Cattle Producers Back in the Game in JapanMon, 06 Jan 2020 10:23:48 CST
As we turn the calendar from 2019 to 2020, an important trade development for U.S Beef Cattle Producers has happened as the partial US-Japanese trade agreement took effect.
Erin Borror, Economist for the U.S. Meat Export Federation, says, "This is a super exciting way to start 2020. We are looking at revisions to our forecast right now and moving them further to the upside. So, there's clearly a lot going on right now and trying to sort out how everything impacts is a bit mind-blowing. But, for starters, now you're taking that tariff into Japan, our number one market, which we can't forget about, from 38.5% to 26.6% effective now, and that is the same as the competition. Just for perspective, Japan's imports of Canadian beef last year increased by about 85%. So, Canada had that lower tariff rate effective last year 2019 through the CPTPP, so granted rated we won't have a tariff advantage versus the competition, we will be on a level playing field. Still, it shows you how important these tariff rates are and that impact on trade. We do expect a double-digit increase in U.S. beef exports to Japan.
"The other factor you have going on here is on the supply side where Australia is in this, you know, horrible consuming drought you've seen the wildfire coverage on national news. It's just devastating, really hope that turns around, but the fact is that not only in the short term but probably in the longer term, we're going to see those tighter supplies out of Australia. And the Japanese buyers know that. They've already pulled off on that of Australia partially because you also have Australian shifting to China. And then the other thing, you know, in the Japanese market, it also gets very interesting because these tariff reductions should allow us to do more business in like higher value, higher-priced cuts. Because when you think about an ad valorem tariff, 38.5% tax, that is a lot of money, So, with that reduction, you should start to see some changes in the product mix. The other interesting factor here is that we could see some major changes. Australia is the dominant supplier of trimmings to Japan and sells a lot of trimming to the U.S. market for hamburger production. But again, if you see these Australian supplies tightening up, does that open new opportunities, even on some of the more value cuts. Again super interesting dynamics that we're looking at easily a double-digit increase in U.S. beef exports to Japan. We're looking in the range of increases at 13 to 16% here in 2020."
USMEF has had good relationships with those key players within Japan, and it was significant to help get us back on a level playing field. Borror says this will also help with the higher level of beef sales, "We will be working heavily in the Japanese market to regain market share. We didn't slip terribly in beef, and that's a testament to many things, but it also shows how much the Japanese customers and consumers prefer U.S. products. But still retaining and growing our share in that market and really growing Japanese beef consumption, which there is still a lot of room to grow, especially if they look at neighbors like South Korea. So we'll be intensifying those customer communications in Japan, and we're meeting with our staff here in a couple of weeks to really hammer through those plans."
Click on the LISTEN BAR below to hear the complete interview with Erin Borror as she talks with Ron Hays.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR below for today's show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
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