IDEAS home Printed from https://ideas.repec.org/p/ags/motpip/29165.html
   My bibliography  Save this paper

U.S. Beef Trade And Price Relationships With Japan, Canada, And Mexico

Author

Listed:
  • Marsh, John M.

Abstract

U.S. live cattle and beef trade has increased substantially since the mid-1980s. Total beef imports (cattle and beef, dressed weight) increased from 2.51 billion pounds in 1985 to 3.89 billion pounds in 1998. Total beef exports (cattle and beef, dressed weight) increased from 0.42 billion pounds to 2.38 billion pounds over the same period. Consequently, net imports declined by 0.58 billion pounds. On a value basis, U.S. net beef exports (value of total beef exports less the value of total beef imports) has become considerably less negative, increasing by 88 percent from 1980 to 1998. The overall improvement in the U.S. beef trade was characterized, however, by different trade impacts with the major export customers and import suppliers. These countries are Japan, Canada, Mexico, South Korea, Australia, and New Zealand. Trade relationships and beef price effects in this article mainly address those of the first three countries. From 1990 to 1998, U.S. net imports of live cattle and beef (carcass weight) for all countries declined from 9.2 percent to 5.2 percent of total U.S. beef supplies. Given the average market price for that period and the coefficient of price flexibility, this decline implied an increase in nominal slaughter steer price of $4.00/cwt. However, this price effect was offset by other factors in the domestic market, such as large competitive production, increasing dressed weights, increasing wholesale-retail margins, and a decrease in consumer beef demand. Japan constitutes about 54 percent of the export market for U.S. beef. This country has been the fastest growing export market for high-value cuts of U.S. beef; quantities exported increased by 101 percent from 1990 to 1998. Strong economic growth (until 1997), trade liberalization, and changes in dietary preferences account for most of the increase. The result of these expanding exports, as a percentage of total beef disposition, was an increase in slaughter steer price of $1.70/cwt. U.S. beef and live cattle trade with Mexico has improved considerably (until recent import tariffs on U.S. beef); that is, net beef exports were negative at 357 million pounds in 1990 but became positive at 200 million pounds in 1998. Declines in imported Mexican cattle and increases in U.S. beef exports account for the change. Mexico currently accounts for nearly 20 percent of U.S. beef exports. The result of erasing the trade deficit over the 1990 to 1998 period was an increase in slaughter price of $2.12/cwt. The U.S.-Mexican net trade position in beef and live cattle may remain volatile in the future, however. The U.S. net beef trade position with Canada has declined considerably. Including trade in live cattle and beef, net imports from Canada increased from 2.7 percent to 5.2 percent of U.S. beef supplies from 1990 to 1998. In general, imports (cattle and beef) have significantly increased, while exports (cattle and beef) have increased little over this period. Reasons for the increased deficit include Canadian grain policies and feedlot expansion, U.S. excess capacity in meatpacking, a strong U.S. dollar and intercountry price differentials. The result was a reduction in U.S. slaughter price of $2.55/cwt. Economists, however, consider the U.S.-Canadian beef markets to be highly integrated. Thus, reducing the trade deficit may have little impact on U.S. slaughter price. Overall, U.S. trade in live cattle and beef has not reached the same importance as that of grain. Nevertheless, U.S. export and import quantities measured as a percentage of supplies or disposition imply that producer price effects are not zero. Domestic factors of beef dressed weights, red meat and poultry production, beef margins, feed costs, and consumer beef demand still dominate the price determination picture. The provisional tariff imposed on Canadian exports of live cattle, but recently removed by the U.S. International Trade Commission (ITC), would have slightly increased U.S. price and decreased Canadian price. But with compensating Canadian carcasses and beef entering the U.S. market, and increased slaughter costs, the gains may have been nullified.

Suggested Citation

  • Marsh, John M., 1999. "U.S. Beef Trade And Price Relationships With Japan, Canada, And Mexico," Policy Issues Papers 29165, Montana State University, Department of Agricultural Economics and Economics, Trade Research Center.
  • Handle: RePEc:ags:motpip:29165
    DOI: 10.22004/ag.econ.29165
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/29165/files/pip12.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.22004/ag.econ.29165?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Cheryl J. Wachenheim & Jeremy W. Mattson & Won W. Koo, 2004. "Canadian Exports of Livestock and Meat to the United States," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 52(1), pages 55-71, March.
    2. Loyns, R.M.A. & Young, Linda M. & Carter, Colin A., 2000. "What Have We Learned From Cattle/Beef Disputes?," Research Discussion Papers 29238, Montana State University, Department of Agricultural Economics and Economics, Trade Research Center.
    3. Young, Linda M., 2000. "U.S. Canadian Agricultural Trade Conflicts: Time for a New Paradigm," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 1(1), pages 1-14.
    4. Charlebois, Pierre & Gagne, Stephan & Gendron, Carole, 2008. "Economic Analysis of the Liberalization of Red Meat Markets in the Pacific Region from 1988 to 2007," Economic and Market Information 47133, Agriculture and Agri-Food Canada.
    5. Vollrath, Thomas L., 2003. "North American Agricultural Market Integration And Its Impact On The Food And Fiber System," Agricultural Information Bulletins 33639, United States Department of Agriculture, Economic Research Service.

    More about this item

    Keywords

    International Relations/Trade;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:motpip:29165. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/damtsus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/damtsus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.