USMCA Leaves Beef Alone But Mischief Can Linger

By Will Verboven, Contributing Editor

Most folks in the beef industry on both sides of the border were probably relieved with the agreement on a new free trade deal between the United States, Canada and Mexico. I expect they were mostly relieved that negotiators left the cattle and beef trade business alone.

That was no accident – cattle producer and meat processor lobby and trade organizations in all three countries worked hard at keeping their business under the radar and avoid being a target for special treatment. The underlying approach was “do no harm” and “leave well enough alone.” It would seem to have been a coordinated effort not to make any waves and keep hammering home that the old free-trade deal under NAFTA worked well for the highly integrated North American cattle and beef market. There was even a positive step towards making that market even more seamless.

The new United States, Mexico, Canada Agreement (USMCA) has a provision that will establish a trilateral committee to make trade better and easier. The intent of the group is to find ways and means to reduce existing restrictions, red tape and other barriers that impede the timely movement of cattle and meat across the two borders.

More coordinated electronic manifests, bills of lading and health inspection filings might be a good first step. Just a few years ago much of that was still being done manually and by way of fax machines. The underlying problem is that meat and livestock imports/exports tend to involve multiple government departments and agencies, with not all of them operating on the same level of communication and priority.

The reality is that with three national governments, and dozens of state, provincial and local governments with battalions of bureaucrats all protecting their own turf and empires, there are considerable opportunities for mischief. One prays that by establishing an over-arching North American trade movement efficiency group, the cattle and meat business will grow in all three countries. But as we all know, cattle politics always seems ready to raise its mischievous head to aggravate the business.

In contemplating the North American cattle and beef business, one wonders why all the players haven’t taken a more unified approach to their international business outside of North America. The Europeans under the European Union (EU) trade community operate as a bastion of unified protection against anyone wanting to sell anything to their member countries. They have used that approach to thwart open and unfettered market access into their market by North American beef.

They have a rigid quota system in place that tends to favor more South American meat imports. We have no similar North American trading group approach toward meat imports from EU countries. Even the recent free trade agreement between Canada and the EU saw their beef import quota system remain in place with only a few extra crumbs thrown in for Canadian beef. For that dubious privilege, the EU is now flooding the Canadian market with veal exports with no quota restrictions in place.

One wonders what role the global giant meat packers and marketers play in the international game of beef trade movement and meat import quotas. Giants like Cargill and JBS operate massive meat plants around the world and move meat into and out of competing jurisdictions. They do deserve some credit in being able to engage in a delicate trading and merchandising dance to sell their products in offshore markets often between their own products.

Note that in markets like Japan and Korea, a large, single, global processor will be selling their beef from various sources – but under guises like United States Beef, Canadian Beef and Aussie Beef. It must be quite the coordination exercise not to find one’s beef competing with itself in the retail market. Others might find such a marketing situation open to price and quota manipulation. Be that as it may, meat marketing is a tough business and competition seems robust on the surface.

One hopes that the new USMCA trade deal will allow the cattle and beef business to thrive between the three countries and let the free market decide how it will evolve to everyone’s benefit.

The looming issues for cattle producers and feedlot operators in particular are not trade related, they are issues being fabricated by radical anti-agriculture lobby groups to destroy the meat industry. One in particular is the relentless campaign against antibiotic and hormone use in beef production – which they are winning incrementally. More sobering is the recent passing of Proposition 12 in California that affects the confined housing of hens, hogs and calves. One fully expects that sooner or later, dairy and beef cattle in confined operations will be the next target.

Don’t expect voter common sense to save the industry – anti-animal agriculture lobby groups spent over $20 million to delude the gullible voter to vote in favor of Prop 12. The ag groups against the proposition spent a mere $1.5 million.

Trade issues seem like a pretty minor concern with what will be facing animal agriculture in the coming years.