Producers weigh in on the value of exports

Upon the news of the new Chinese agreement, different industry leaders were asked how this will leave an impact on this commerce as a whole.

Stephanie Lastovica

“The U.S. cattleman can definitely produce more beef than we can consume,” said Ryan Moorhouse, a stocker and feedyard manager in Hartley, Texas. “Currently, we are consuming between 80 percent and 90 percent of domestic production. We are exporting between 10 and 13 percent of production. With the advances in genetics and production technology we’ve made in the past few years, our production is set to increase even more. We’ll have to have a place for all this domestic beef production to go.”

China’s changing political and economic environment has opened the door for the Chinese people to have more disposable income. China’s middle class has expanded in the last decade, creating a market for beef in that country.

“Exports are definitely a relief to our supply issues and a demand driver, especially since 95 percent of the world’s population lives outside the U.S.,” Moorhouse explained.

“With the economies of some countries getting stronger over the past few years, it allows for more spending by their middle class. Food, protein in general, is one of the first places people will spend more money. The U.S. cattlemen need beef to be available to all those who want it and can afford it in these countries.

“China would be the biggest example of a market we are not currently exporting beef to that would be a huge boost in demand if we could get our beef products into there.”

Moorhouse said which segment benefits the most is hard to distinguish, but the sentiment of a tide lifting all boats is an apt one to follow.

“It is hard to say which segment it benefits the most. Exports tend to be an underlying current that gradually boosts beef demand and takes some of the domestic supply away so we don’t have to consume it here in the U.S. According to the U.S. Meat Export Federation, the first-quarter export value per head of fed slaughter averaged $267.71. So this value of $267.71 would be the additional value exports gave to a finished steer/heifer. This value would be spread down through all the segments.”

“There currently isn’t a value given for each segment that anyone tracks. Maybe this would be something worth investigating? Either way, we do know exports add huge values to our industry, and if we can get other markets open, it will help even more…. especially China.”

As Moorhouse explained, we cannot know exactly how much money would be put in the cow-calf producer’s pocket with a rise in exports. We can say for certain stronger demand for U.S. beef worldwide is good for the industry, thus good for the cow-calf producer.

David P. Anderson, professor and livestock economist for Texas A&M AgriLife Extension Service, said producers will see export demand in calf prices, although it may be a hidden value. Ranchers rely on the packer to export beef, hides and offals, which translates to more demand for those items from a feeder, “then the more cattle a feeder needs to buy from ranchers or stocker producers.”

Another way exports add value is felt indirectly in the timing of growing export sales, Anderson said. “Most producers’ cows calve in the spring, and then calves are weaned and sold in the fall. Booming exports, boosting prices in the spring might not be felt by a rancher who has no calves to sell due to their production process. But sustained export growth builds prices and values that will be experienced by those ranchers.”

When asked about the influence of more export markets opening, registered cow-calf operator Kevin Jensen of Jensen Brothers Herefords in Courtland, Kansas, was very positive.

“No doubt, the opening of more export markets will be a very positive influence. It may just propel the beef market out of what looked like the beginning of a down cycle.”

So with the new opportunities and current re-opening of more export countries, how long will it take your operation to see results? Does a registered herd benefit from this more, less or the same?

“Actually, you will see results immediately,” Jensen remarked. “Markets are volatile and higher than what they were predicted to be. Everyone appears to have better attitudes now, which can even be seen with our buyers mentally thinking more positively, resulting in paying more. Different clients, no matter if registered or commercial, with market-ready cattle, are seeing that the producer is getting more.”

Experts find routinely that commercial cow-calf operations and registered breeders alike should benefit from increased beef exports. The registered seedstock producers in the U.S. have done a tremendous job in breeding higher-quality genetics that allow commercial cattlemen to wean heavier calves.

This has put more tonnage of beef per animal on the market. In turn, this allows the extra tonnage produced to meet the broader demand of the increased export market.