An Omaha company put about 40 boxes of steaks on an airplane bound for China last week, marking the first commercial shipment of U.S. beef to China in 14 years.
The shipment from the Greater Omaha Packing Co. came just two days after the U.S. Department of Agriculture (USDA) finalized details to allow the U.S. to begin beef exports to China.
"China has the potential to be the largest market for U.S. beef," said Henry Davis, CEO of the Omaha meat-packing facility, during a news conference. "This will be the first of many shipments."
Dan Jensen, vice president of sales and marketing for the Greater Omaha Packing Co., told reporters the test shipment will allow the company to learn how the process of exporting beef to China works.
Earlier in the week, the USDA Agricultural Marketing Service (AMS) posted the requirements for its Export Verification program for U.S. establishments shipping to China, which enabled packers to apply for approval to export to China.
First since 2003
The U.S. has been out of the Chinese market since 2003, when a single case of bovine spongiform encephalopathy (BSE) was diagnosed in the U.S. During that time, China has become a large buyer of beef, increasing imports to $2.5 billion in 2016.
The U.S.-China agreement, which has been in the works since last September, applies to cattle born, raised and slaughtered in the U.S. as well as cattle imported from Mexico or Canada raised and slaughtered in the U.S. or cattle imported from Mexico or Canada for direct slaughter.
Beef and beef products must be from cattle less than 30 months of age and must be traceable to birth or to the first port of entry, the USDA said. China also has restrictions on the use of beta-agonists and hormones used in commercial cattle production.
"We’ve been hearing for some time that China would re-open to U.S. exports, but until recently, the details were unclear," said Iowa Cattlemen’s Association CEO Matt Deppe. "The requirements released by the U.S. Department of Agriculture give the industry a much better understanding of the nature of the beef products that will be accepted."
These requirements may initially challenge some producers and processors, but various voluntary process-verified programs exist that would meet the specifications, Deppe said.
"There can be more costs associated with these programs, but there may also be more profit," he said. "Regardless, the programs are voluntary, and it will be up to individual producers to decide whether participation in a process-verified program works for them."
Only a small proportion of U.S. commercial beef production fits China’s protocols, which will slow the potential ramp up of any additional exports to China, said American Farm Bureau Federation economist Katelyn McCullock.
"The Chinese requirements will not be something that U.S. meat packers can sort in the cooler," she said. "Product will need to be grown to meet these specifications, starting at the cow-calf level, to move through the system."
Beef consumption rising
Beef consumption in China, which has about 1.4 billion people, has been climbing along with imports over the past five years, said McCullock. China’s beef imports soared from 50,000 tons in 2011 to more than 601,000 tons in 2016.
With the U.S. shut out of China, "Australia has taken the lion’s share of the business in this growing market, followed by Uruguay," McCullock said.
"China is expected to become the largest beef destination in the world and has the potential to be a major destination for U.S. product," she said.
The market in China has changed substantially since 2003, when the U.S. supplied 80 percent of Chinese beef imports, McCullock said.
More than 20 percent of U.S. beef shipped to China at the time were items known as offal, such as tongues, kidney and livers, she noted.
"As the demand for beef has grown in China, the amount of offal imports has grown as well but has been vastly outpaced by the rise in muscle cuts, she said. "In 2011, offal accounted for 25 percent of total beef imports to China, and by 2016 that number dropped to 4 percent, even though offal imports have increased three-fold since 2011."
International trade has been a priority for the Iowa Cattlemen’s Association, Deppe said.
"Beef exports have the potential to dramatically increase Iowa cattle producers’ bottom lines. Most of the products exported, like tongue, hides and offal, are not valued to U.S. consumers and would become waste products without international markets," he said.