By Todd Patrick :: June 29, 2017
Upon the announcement that the US Government would begin taking steps toward commercial shipments of US beef and beef products to China for the first time since 2003, there has been a great deal of information surfacing. The US Dept of Agriculture has been working diligently with Chinese officials on the final details of how to begin these exports and clear away long-standing road blocks in beef exports.
CFI recently began researching rates and transit based on an initial test sample sent from Omaha, NE to China by the US in preparation for future trading.
Considering the immense size of the Chinese market, we fully expect these exports to gain traction and build momentum over the next six months to a year and significantly compound the current beef exports we make on behalf of our clients. Serving cattle shippers from Iowa, Nebraska, Pennsylvania, Ohio, Wisconsin, California, Washington, Georgia, and Texas, we’re fluent in moving beef into the Asian markets of Japan, Hong Kong, Thailand, and UAE. Up until last year, US beef was banned in Saudi Arabia but as that ban lifted, exports grew quickly into their market; likely mirroring the experience we expect to see in China through the coming months.
While beef exports are tied to currency fluctuations and a currently strong US dollar can cause difficulties exporting high value commodities such as beef, CFI still exports large volumes of beef. Our Chicago office alone shipped 700 LD7’s in 2016 with a value of $80,000 per 8-10K lbs and a full ocean container commanding close to $250,000. For these reasons we expect beef exports to remain on a consistent rise unless impacted by trade relations between countries, as happened in Qatar recently.
The USDA Agricultural Marketing Service posted the Export Verification program requirements, which will enable shippers to apply for approval to export to China. The USDA Food Safety and Inspection Service also updated the Export Library to include China’s requirements for certifying US beef.
Fourteen years ago, the initial split between China and the USA occurred due to a case of mad cow disease in Washington state. It was a noticeable problem to lose such a huge export market and other beef exporters in Brazil, Australia, and Canada picked up the slack in the US’s absence. Unfortunately, the topic of Brazilian beef also entered the news when rumors of insider trading, bribery and falsification of documents came to light. While Brazilian authorities have blamed many of these tribulations on understaffing and budget cuts for sanitary problems, the USA banned Brazilian beef imports on June 23rd of this year. While the US is the only country currently banning Brazilian beef, officials in Canada and Europe have also rejected imports from Brazil recently.