Written by Charles Hord, TCA Executive Vice President
TCA has received lots of calls, emails, and comments recently concerning beef cattle policy. I appreciate the civil and engaged manner these discussions have taken place. The issues are often complex, we may not always agree, and things are seldom black and white, but I do try to listen to all sides and share concerns with our Board of Directors (made up of Tennessee cattle producers) who ultimately decide TCA policy.
A lot of folks have asked about beef imports and specifically imports from Africa. About 11% of the beef we consume in the US is imported. Canada, Mexico, Australia, and New Zealand account for 83% of the beef we import. These imports are mostly lean beef trimmings we use in ground beef to complement the leftover fat trimmings we have from our fat cows. Most are used in the fast-food sector for hamburgers. We export more beef than we import (beef export value exceeds import value by $2.3 billion) and we rely on open trade agreements to increase the value of our animals. It has been estimated that exports account for $350 per head in value for every animal we process. This includes cuts like livers (we send about $100 million worth of livers to Egypt annually) and tongues (about $100 million sent to Japan annually) among many other items. Exports allow us to receive the greatest return on items we don’t typically consume in the US. To specifically address the meat coming from Africa, it is not much (25 metric tons) and comes from just one country, Namibia. For perspective, the US produces about 28 billion pounds of beef annually. Namibia went through a decade long process proving that they are meeting US standards for safety and inspection before they could import into the US including USDA inspection of the processing facility in Namibia. In short, open foreign trade allows us to maximize our domestic beef production and allows us to sell products overseas we do not consume here. One note worth mentioning is that TCA does oppose imports of beef from Brazil due to concerns over Foot and Mouth disease and our National Cattlemen’s Association has continued to advocate on our behalf against allowing Brazilian beef into our country. TCA’s position is that open markets are essential for our profitability and imports work to fill supply gaps.
There is a lot of anger towards the big packers right now (some rightfully so in my opinion) and the Spot or Open Market Bill (50/14) being proposed by Iowa Senator Chuck Grassley is one response to concerns over packer margins. This bill mandates packers to make at least 50% of packer weekly cattle purchases occur through the cash or spot market. Currently, about 20% are purchased through the cash market from feedlots and the rest through contracted agreements. Few details are known about these contracted agreements including prices. This lack of transparency impacts futures and price discovery. Some cattlemen’s groups believe this bill will benefit cattlemen by providing real-time values for cattle. The concern is that we are inviting government mandates into what is a free market system. This bill would limit cattlemen’s ability to manage risk and receive premiums for quality by limiting alternative marketing agreements such as grid or formula pricing. The National Cattlemen’s Beef Association (NCBA) (which TCA is affiliated) believes there are better ways to achieve transparency and price discovery. Some cattlemen’s groups like R-CALF and the US Cattlemen’s Association are in favor of the bill. Even though these are all cattlemen’s groups, these associations do not always play well together and unfortunately, resources are often wasted competing. Stones have been cast back and forth trying to discredit one another on issues like this that are complex and need thoughtful deliberation. Our TCA Policy Committee recently had a discussion regarding the bill but decided to gather more information before making a policy recommendation. The issue will be discussed at our upcoming full board meeting.
Mandatory Country of Origin labeling (MCOOL) was in place from 2002 until 2015. It was repealed after the World Trade Organization (WTO) found the US to be in violation of our free trade agreements with Mexico and Canada due to MCOOL. The WTO ruling allowed Mexico and Canada to place retaliatory tariffs on US beef imports. NCBA then lobbied for MCOOL to be repealed. The cost of these tariffs was estimated to be $1 billion since Canada and Mexico are two of the biggest importers of US Beef. Independent studies also found consumers (despite their claims) paid little attention to origin labels when they made their purchase decisions. Most of these imports are used in foodservice (fast food hamburgers) and not retail so the labeling requirements didn’t apply anyway. It should be noted that there is nothing stopping any company from voluntarily labeling their meat as a product of the USA if they can back up their claims. NCBA is against Mandatory Country of Origin Labeling due to the tariff concerns but has advocated for voluntary labeling. When this was voted on previously, TCA supported NCBA’s position.
Finally, I want to discuss the Prime Act. This federally proposed bill would allow the meat to be sold intrastate to restaurants, hotels, and grocery stores that are processed through a custom slaughter facility. Custom slaughter facilities are regularly inspected by USDA but an inspector is not on hand when animals are processed. A USDA Inspected facility has an inspector on hand when all animals are processed. Custom facilities can only process an animal for the owner of the animal and the meat is not allowed to be re-sold. Many producers in Tennessee sell live animals to consumers who then have them processed through these custom facilities and it has proven to be a valuable marketing strategy. This bill would allow custom processed meat to be sold to others in Tennessee. Our Board of Directors discussed this bill when it was introduced last year and decided to take no position on it. The board supports more local meat production and sales but had concerns promoting beef being sold that was not USDA inspected. TCA felt the federal inspection requirement was key for consumer perception regarding the safety of our product and they wanted to avoid the worst-case scenario of bad meat being sold to a consumer. NCBA has also expressed concerns waving the USDA inspection requirement to re-sell beef.
I realize some of you may not agree with these positions but understand that all decisions were made by Tennessee cattle producers with Tennessee cattle producers’ interests in mind. Also, remember the Board of Directors relies on resolutions to guide our policy decisions. Any county association can submit a resolution to be considered and voted on by our delegates at our annual meeting in January. If you have a question about submitting a resolution or getting involved in our policy process you can call the office (615-896-2333) or send me an email: Charles@tncattle.org