Commentary by Bill Bullard, CEO, R-CALF USA
Free trade dogma suggests that more imports benefit consumers by affording them more choices and lower prices. Let’s see if this holds true in the U.S. beef market.
We’ll go back nine years to 2016. This way our analysis begins well before the widespread drought that began in 2020, and which accelerated the ongoing decline of our U.S. cow herd.
Since 2016, the beef equivalent of cattle and beef imported into the U.S. increased by 44 percent (from 3.76 billion pounds to 5.42 billion pounds). These imports increased year over year from 2016 through 2020, then they declined some in 2021 and 2022; but they quickly jumped to a historical high in 2023, only to jump to a new all-time record high in 2024.
We can say that imports increased dramatically during that 9-year period. So, if the free trade dogma is correct, then consumers should have realized more choices and lower prices. Let’s look at prices first.
Since 2016, all-fresh beef prices have increased 40 percent. That’s right, in 2016 the all-fresh beef price was $5.74 per pound and after imports increased 44 percent during the nine-year period, the all-fresh retail price of beef increased to an all-time record high of $8.01 per pound in 2024.
If the free trade dogma was correct, there would be an inverse relationship between imports and beef prices. In other words, when imports increased, beef prices would be expected to decrease.
But they didn’t, instead there’s been a long-term positive relationship between imports and beef prices – as imports increased, so too did beef prices increase.
So, let’s look at a new question to get to the issue of consumer choices: If tariffs lower the quantity of imports in the U.S. market, will consumers then have to pay more for beef?
Here’s what we know: not including the additional beef imported in the form of live cattle, in 2024 the total quantity of those record imports was about $0.67 per pound cheaper than the per pound value of our total quantity of exports.
This means that on average, the global importers landed 3.5 billion pounds of beef into the U.S. market at a total price savings to them of $0.67 per pound, or about $2.3 billion.
Did the global importers pass this total price savings to consumers by allowing them to choose between the cheaper imported beef and the higher valued domestic beef? Or did the global importers merely comingle their cheaper imported beef with domestic beef and charge consumers the domestic beef price for both domestic and imported beef because consumers couldn’t tell the difference?
We believe that’s what’s been happening. Because Congress has not passed mandatory country of origin labeling (MCOOL) for beef, consumers cannot distinguish the cheaper foreign beef from domestic beef and the global importers can charge the same price for both since consumers have no way of differentiating between the two.
When and if Congress passes MCOOL for beef, consumers will have a choice of buying domestic beef or foreign beef, but until that happens, the price savings from buying cheaper foreign beef can be captured by the global importers.
Now you know why the global importers are lobbying Congress so hard to not pass MCOOL – they don’t want their free lunch taken away.
But here’s what should be a grave concern for everyone – consumers and producers alike. Within that nine-year period during which total imports increased 44 percent and beef prices increased 40 percent, the latest U.S. census shows the United States lost another 107,000 beef cattle producers.
The reason we’re losing our nation’s family-scale cattle ranches at such an alarming rate is that imported beef and cattle are displacing both our producers and our cattle within the domestic beef supply chain, causing America to become increasingly dependent on foreign supplies for one of its most important protein sources – beef.
So how do we reverse this disastrous situation so consumers can have access to an abundant supply of affordable beef and the choice to purchase cheaper foreign beef or domestic beef.
Well, tariffs can help reduce the profit taking by the global importers by limiting the quantity of imported beef and reducing the price disparity between imported beef and domestic beef, and when MCOOL is finally passed, consumers can then choose to strengthen our domestic beef supply chain by choosing to buy beef produced by domestic ranchers.
These two reforms will increase transparency and competition in the domestic beef market and that, more than anything else, will ensure that beef is priced fairly for consumers and that America’s national security needs are met by becoming near self-sufficient in the production of beef.
This is not a new dogma. Our plan replaces global power with competition, which will benefit everyone except the global importers.
