The beef sector has been largely unphased by the ongoing U.S. trade disputes with other countries. Fortunately, trade quarrels with the largest U.S. beef customers, South Korea and Japan, have been avoided. According to the U.S. Meat Export Federation (USMEF), through October of last year, the value of overall U.S. beef exports was up 19 percent compared to the previous year. Exports to Japan were up 15 percent and those to South Korea were up 50 percent. Japan was the largest U.S. customer, purchasing nearly $1.5 billion in U.S. beef. For Nebraska, the nation’s largest beef exporter, these exports have helped offset the less than stellar export performance of other agricultural commodities.
Nebraska beef producers need exports to grow again in 2019 to help offset the expected growth in beef production. However, the launch of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) at the beginning of the year could be a headwind for increased export growth. The CPTPP is comprised of 11 countries, including Canada, Australia, New Zealand, Mexico, and Japan. It was resurrected from the ashes of the Trans-Pacific Partnership (TPP) of which the U.S. was a part until President Trump withdrew in January 2017. Under the CPTPP, Japan will lower tariffs on beef imports from CPTPP members over a 15-year period. Japanese beef purchases from Australia, Canada, New Zealand, and Mexico will have reduced tariff rates and purchases of U.S. beef will continue to face higher tariffs, placing U.S. exports at a competitive disadvantage.
Australian beef is the primary competitor to U.S. beef in Japan. A report by the University of Tennessee showed the shifts in beef suppliers to Japan could be significant under the CPTPP. According to the report, “For chilled beef, lower tariffs appear to benefit Australian beef, at the expense of U.S. beef. The projection range suggests that Australian beef could increase by as much as $139 million, while U.S. beef could decrease by as much as $143 million.” Analysis by the USMEF echoes the University of Tennessee findings, “. . . the U.S. share of Japan’s growing beef imports is expected to decline, from 43 percent to 36 percent by 2023, and to 30 percent by 2028. Due to widening tariff disadvantages and lost opportunities, U.S. beef annual export losses by 2023 are estimated at $550 million, and will exceed $1.2 billion by 2028. On a per-head basis, losses are estimated at $20.40 by 2023 and $43.75 by 2028.”
The Trump Administration is in the process of negotiating a free trade agreement with Japan. The specter of the potential losses in beef exports has many in U.S. agriculture encouraging the Administration to see these negotiations to a successful end sooner rather than later. A trade agreement with CPTTP-like tariff reductions on U.S. beef would level the playing field and help maintain U.S. market share in Japan’s large and growing market. Nebraska, more than any other state, needs to see these negotiations be successful.