“Economically Catastrophic”

“Entirely ceasing U.S. beef export and import trade would be economically catastrophic” conclude Glynn Tonsor and Derrell Peel, agricultural economists with Kansas State University and Oklahoma State Universities, in a report prepared for the Beef Councils in Kansas, Oklahoma, and Texas. The report examines the role of beef exports and imports in the U.S. beef industry and quantifies the economic impact that could result from reducing U.S. beef exports and imports or ceasing trade entirely. It also provides a background, insights, and details of beef trade between the U.S. and other countries.

Nebraska typically leads the nation in beef exports with sales ranging between $1.0-$1.3 billion. The U.S. is the world’s largest exporter of beef but at the same time it is also one of the world’s largest beef importers too. The role of trade in the beef sector, as measured by the share of production exported or imported, has grown over time (Figure 1). Trade in beef is often questioned too. Questions of how the U.S. can be both a large exporter and importer of beef and whether the U.S. industry would be better off economically if it didn’t trade beef are often raised. Tonsor and Peel discuss these questions in their report.

Figure 1. Share of U.S. Beef Production Exported/Imported

Source: Dr. Glynn T. Tonsor and Dr. Derrell S. Peel, Assessing Economic Impact That Would Follow Loss of U.S. Beef Exports & Imports, Report prepared for Kansas Beef Council, Oklahoma Beef Council, and Texas Beef Council, June 4, 2022.

Exports and imports of beef are largely conducted by different firms trading mostly different sets of products. Trade in beef creates economic value for these entities bringing greater value to sector as a whole. Between 2016 through 2020, Tonsor and Peel estimate the average beef export price was $3.13 per pound while the import price was $2.52 per pound. “These statistics clearly indicate participation in the global market provides a net economic gain,” they state.

A 10 percent reduction in beef exports and imports would result in a loss of $786 million to Nebraska producers selling feeder cattle and $1.25 billion for sellers of fed cattle estimate Tonsor and Peel. This is because prices and quantities of feeder cattle and fed cattle would both decline with a reduction in trade. The cumulative impact to U.S. producers would be an economic loss of $12.9 billion to feeder cattle sellers and $6.8 billion to fed cattle sellers. If trade ceased entirely, it would result in a $129 billion loss for sellers of feeder cattle and $68 billion for sellers of fed cattle and a much smaller cattle industry in the U.S.

Trade in beef is an economic win for Nebraska. Losing trade would be “economically catastrophic” for Nebraska and the U.S. according to the Tonsor and Peel report. A copy of the report can be found at: https://agmanager.info/livestock-meat/marketing-extension-bulletins/trade-and-demand/assessing-economic-impact-would-follow.