New Deal, New Opportunities for U.S. Beef in the European MarketWed, 08 Jan 2020 06:35:55 CST
As 2020 began, the trade deal with Japan puts U.S. Beef on level footing with beef coming from other countries that are importing into Japan. But there is another deal that started on January 1 that will also be good news for U.S. Beef headed for the European Union. This is the quota that was initially set up for the United States, in return for us stopping the imposition of tariffs against the European Union because of their failure to allow our beef into the E.U. over their phony hormone ban for years and years. This battle over U.S. beef into the European Union stretches back to the 1980s. When it was first established, the United States was using most of the quota for themselves; however, at the time it was established, it was not an U.S. exclusive quota. Over the years, at other beef producers have seen the opportunity to sell into the European Union and have met the standards- they have taken quota away from the United States. Now, this new deal between the Trump administration and the European Union means at least a portion of the quota will be exclusively U.S. (Click here for a story from 2019 that offers the President Trump Announcement- and some unhappiness expressed by German cattle producers.)
Erin Borror, Economist for the U.S. Meat Export Federation, says it's a guaranteed quota for U.S. Beef into the E.U. "Yes, absolutely. It is a very important market, as it is a niche market, but critical, high value, lots of growth potential. So yes, we're looking at a U.S. specific share of this quota. It starts at 18,500 tons this calendar year, and it grows to 35,000 tons over the seven years. So that is out of a total of 45,000 tons, which had been increasingly dominated by our competitors. We were squeezed down to, you know, close to 20% market share. And it was not a sustainable agreement and so, fortunately, USTR and the European commission did reach an agreement to give us an U.S. share. And this U.S. specific share essentially allows us to grow by about 25% during year one and then another 25% next year because it jumps to 23,000 tons in 2021.
"So this is really exciting for U.S. beef producers and for our customers in Europe who have been just chomping at the bit to do more with U.S. beef, but it was not really possible when you have to clear product in the first couple of weeks of each quarter because this quota operates quarterly. It was getting fully used within the first couple of weeks of each quarter. And you're trying to manage chilled, high-value products in that European market whether you're a chef or a retailer, you need that consistent supply. You can imagine on this side trying to produce no hormone no antibiotic cattle- those program cattle going from the feedlot all the way through the plant, making sure that ship lands in Rotterdam within the first couple of days of each quarter, is kind of a nightmare. So now you have some business continuity, and our staff on the ground in Europe will be able to plow into new markets where we just basically hadn't touched because we couldn't really grow. So yeah, super exciting."
Borror also says she expects to continue to see growth for U.S. beef in South Korea, "Yes, South Korea, I've called my model market for a few years now. It's just been fantastic. And so exciting for us to watch. Because it's been, you know, it was a difficult battle back for a while. Candlelight vigils in the street against U.S. beef, lots of hurdles to come back after BSE overlaid with the Free Trade Agreement and a lot of politicization of U.S. beef. Huge kudos to our team in Korea that worked amazingly. Of course, economic growth and the trends to crave and appreciate protein as a healthy food source have also underpinned a lot of our growth. Then more recently, the convenience trend, which has just been amazing and we pretty much have to see it fully fathom."
Click on the LISTEN BAR below to hear this final segement of our full interview with Erin Borror as she talks with Ron Hays. You can also go back and listen to the complete interview that we posted earlier as an Ag Perspectives Podcast with Erin Borror by clicking or tapping here.
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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