Most of you have heard of the Great Wall of China. The Great Wall of China is a series of fortifications made of stone, brick, rammed earth, wood, and other materials, generally built along an east-to-west line across the historical northern borders of China to protect the Chinese states and empires against the raids and invasions of various nomadic groups. This historical construction took centuries to build and currently stands in various stages from highly preserved to major disrepair. One archaeological survey found that the entire wall with all of its branches measure out to be 13,171 miles.
Many believe there has been a mythical Great Wall of China that has prevented the U.S beef industry from exporting our beef and beef products to that country. This mythical wall was built in December, 2003 when a single cow was diagnosed with Mad Cow Disease in the state of Washington. Shortly thereafter, China enacted a ban on the importing of U.S. beef to China. Until the ban took effect, the U.S. was China’s largest supplier of imported beef at roughly 70% on their intake.
Earlier this year, officials in the Trump administration and Chinese officials entered into negotiations to end the ban of U.S. beef sales to China. These negotiations resulted in the United States and China agreeing to start the commercial shipment of U.S. beef and beef products to China for the first time since 2003.
The USDA Food Safety and Inspection Service have updated China’s requirements for certifying U.S. beef being shipped there. These requirements include specific language that beef and beef products from cattle that were born, raised, and harvested in U.S. as well as cattle imported from Canada or Mexico that were raised and/or slaughtered in the U.S. are eligible. Cattle must be traceable to the U.S. birth farm through a unique tag identifier and less than 30 months of age to produce eligible beef. Chilled or frozen products produced may be shipped from plants USDA-approved to export to China. There are also restrictions on certain growth-enhancing products and other feed additives. It remains to be seen as to how responsive the U.S. beef industry will be to this new marketing opportunity.
How significant will the Chinese market be for the U.S. beef industry? There is information that indicates there is tremendous potential for U.S. beef sales to China. In 2012, 68% of China’s population was classified as middle class who equaled 550 million people. This group is expected to grow by another 5% by 2022. The growth in China’s economy has allowed China to be a major beef buyer as purchased imports have increased over the past five years by over $2 billion. Currently, the people in China eat 12 pounds of beef per person annually.
With this exciting news, many questions remain about how quickly the U.S beef industry can prepare to capitalize on the opportunity in China. The U.S. does not have a mandatory cattle ID program. Will U.S. cattlemen increase their participation in age and source verification programs? Will producers avoid the use of hormones and certain feed additives to meet China’s requirements? What type of beef products will the Chinese prefer to purchase from the U.S.?
The bottom line is that we are in the infancy of the renewed relationship between the U.S. and China in regards to beef. The U.S. is currently the world’s fourth-largest exporter of beef. The U.S. typically exports 10% – 15% of our production and export sales in 2016 totaled over $6.3 billion. How quickly and adeptly the U.S. beef producer adapts to the updated requirements to export beef to China will ultimately determine the economic impact on the beef industry.