Recent signal from China essentially a repeat of first of three-stage process for resuming trade.

Krissa Welshans 1, Feedstuffs Editor

April 19, 2017

3 Min Read
Export protocol negotiation to decide timeline for U.S. beef in China

China once again signaled that it will soon be allowing beef imports from the U.S. after a nearly 14-year ban. The news followed a very similar announcement made in September 2016, although no actual trade has occurred yet.

Josh Maples, assistant professor of Mississippi State University’s Department of Agricultural Economics, said gaining access to the most populated country in the world would be a very positive development for the U.S. beef industry.

“China represents a multibillion-dollar market and has the greatest growth potential for beef consumption of any country in the world. China has a large and growing middle class and has experienced steady increases in beef consumption,” Maples said. In fact, he said China and Hong Kong combined to be the largest beef importers in the world in 2016, and while the U.S. already exports to Hong Kong, 87% of China’s 2016 beef imports were from Brazil, Uruguay, Australia and New Zealand.

If the U.S. is going to be able to export beef to China, Maples said both countries must reach a bilateral agreement over trade specifications. The three-step process for resuming trade includes first lifting the ban on U.S. beef, after which export protocol conditions have to be negotiated, including a discussion of traceability requirements. The last step is an audit of these protocols.

With these steps in mind, Maples said the announcement China made last week should be viewed more as a repeat of the first step.

He said looking at the process Canadian beef followed to re-enter the Chinese market can provide a reference.

“China also closed the door on Canadian beef in 2003 as a response to bovine spongiform encephalopathy (BSE). In June of 2010, China announced it would reopen imports of Canadian beef in stages,” Maples explained.

China first allowed boneless frozen beef from cattle under 30 months of age, shipments of which began in May 2011. China agreed to allow Canadian bone-in frozen beef from cattle under 30 months old in September 2016. In regard to traceability, Maples said the cattle from which the beef is harvested must meet the requirements that “each animal has a unique identity, the farm of origin (place of birth) can be traced and the cattle should be slaughtered at less than 30 months of age.”

While the process to begin shipment of U.S. will not necessarily have to follow the same staged process or take the same amount of time, Maples said this is a good example of the types of protocols and regulatory hurdles that must be negotiated.

“It is important to note that, if and when we finally start exporting beef to China, much work will need to establish market share of U.S. beef in China,” he said.

Per capita consumption of beef is much lower in China (projections are 12.7 lb. per person in 2017) compared to the U.S. (56.2 lb. per person in 2017), according to Maples.

“While this shows enormous room for growth, the growth will likely be throttled by household income,” he added. Average per capita income in China was $8,028 (U.S.) in 2015 – significantly lower than the U.S. average of $56,116. “This leads many Chinese consumers to be very price sensitive. Further, the beef produced in the U.S. is overwhelmingly grain-fed as compared to the predominantly grass-fed beef produced by most of China’s current trading partners," Maples said, noting, however, that China's large population means gaining even a small share of the per capita consumption totals will "have a large impact on U.S. exports.”

Maples said while the possibility of exporting to China should assuredly be viewed as very positive for U.S. beef producers, the finish line has not been reached.

“The resurgence of the topic in media stories last week is more of a reminder of how important beef exports to China could be to our industry than a new development,” he said.

About the Author(s)

Subscribe to Our Newsletters
Feedstuffs is the news source for animal agriculture

You May Also Like