This holiday season will be the 10-year anniversary of “The Cow that Stole Christmas.” The past decade has taught us a hard lesson about the importance of and opportunity from beef exports for the bottom line of everyone in this industry. Even today, it is difficult to fully appreciate our export potential since we still do not have 100 percent market access around the world. But a decade has now passed since we lost nearly everything, making this a good time to again remind ourselves about the importance of beef exports.
U.S. beef exports in 2003 were $3.86 billion, with Japan leading the way at $1.4 billion. The November 2003 value of beef exports was $150 per head — a historic high. If hides and offal were added in, the value of these exports came to just under $200 per head. Currently, export markets account for almost $300 per head, which means that 17 percent of the value of a finished steer now comes from the international marketplace. The increased buying power of consumers across the globe for U.S. beef these past 10 years has been amazing, and recent changes suggest we may be seeing only the tip of the iceberg.
It took 10 years of unbelievably difficult diplomacy, but on Feb. 1, 2013, we were finally able to nearly normalize beef trade with Japan. Will our exports to Japan finally return to pre-BSE levels, and if so, could we have done things differently and gotten there sooner? Possibly. This year’s resurgence in exports demonstrates that the relationship between Japanese consumers and U.S. beef is still very strong. In the future, the greatest challenge facing this relationship may be that consumers from other countries have the ability to outbid Japanese consumers for the same cut of U.S. beef. Japan’s 38.5 percent applied tariff on all beef imports is now one of the highest that U.S. beef faces anywhere in the world. For the first time in nearly a generation we will have an opportunity to lower and eventually remove this tariff within the context of the Trans-Pacific Partnership trade negotiations.
In South Korea, we were successful in negotiating a straight-line reduction in that country’s 40 percent tariff on beef imports of 15 years, for a 2.67 percent-per-year decrease in that tariff . In 2014, we will be in the third year of implementation of the agreement, which will put the tariff on U.S. beef at 32 percent, or 8 percent less than everyone else exporting beef to South Korea. How big will this 8 percent be?