Economic Tidbits

Why Does the U.S. Import Beef?

The question is often asked why the U.S. both imports and exports beef. Intuitively, it seems it would make more sense to neither import or export beef and have U.S. production supply U.S. demand. After all, imports and exports of beef as a share of production are roughly the same.

The short, simple answer to why the U.S. both imports and exports beef: ground beef and finding the right proportion of beef products to meet consumer demand. No country in the world consumes as much ground beef as the U.S. Using imported beef trim, industry can meet consumer demand for ground beef at a lower cost, while at the same time exporting muscle cuts to maximize value for cattle producers. It isn’t intuitive, but it works.

North Dakota State University, Texas A&M University, and West Virginia University cooperated this spring and summer to host a series of webinars called the “Intersection of the Cattle and Beef Industries.” One of the webinars focused on U.S. beef trade and featured Derrell Peel of Oklahoma State University, a professor and researcher studying the beef industry for 40 years. Peel says the U.S. uses 8.5 billion pounds of beef trim in ground beef, about 45 percent of total beef consumption. This equates to 26 pounds per person, or the equivalent of 104 quarter-pound burgers.

U.S. consumers typically purchase 75-80 percent or higher of lean ground beef. The slaughter of fed cattle yields 55 percent lean trim. Thus, to meet consumer demand it requires the blending of leaner trim to make the final product at the least cost possible. Think of it like calculating the least-cost ration for feed. Lean trim from the slaughter of cull cows and bulls meet some of the need, accounting for 27 percent of the trim which go into ground beef. Imports comprise the remaining portion, about 26 percent. Peel says that 72 percent of beef imported, mostly from Australia, Canada, and New Zealand, goes to ground beef production.

What would happen if the U.S. didn’t import lean trim for blending? Peel offers a few alternatives. Decrease ground beef production by 45 percent; grind more muscle cuts into ground beef; or keep 10-15 percent of the calf crop as yearlings to run on grass and sell like cull cows. None of these alternatives would provide greater value for cattle producers or consumers. While it isn’t intuitive, importing and exporting beef provides consumers what they demand, yet allows cattle producers to achieve greater value for their animals.

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