Analysis: No panic after return of US beef to China

by China Plus commentator Luo Dan

It has been more than 2 weeks since China resumed beef imports from the United States after 14 years, a move seen by many as a good start to enhanced trade between the two countries.

The U.S. President Donald Trump tweeted on July 13, that it was “an exciting opportunity for agriculture”, attributing the return of US beef to a recent US-China trade deal.

The US Secretary of Agriculture, Sonny Perdue, center, joins a ceremony marking the return of US beef in Beijing on June 30, 2017. [Photo: china.com.cn]

The trade-deal, better known as the U.S.-China Economic Cooperation 100-Day Plan, consists of ten initial goals, with the resumption of US beef imports listed as number one.

The beef import ban was put in place in 2003, after a case of bovine spongiform encephalopathy, or mad cow disease, was reported in the United States.

The 100-day plan also says the two sides will try to "resolve outstanding issues for the import of China origin cooked poultry to the United States," very soon.

Analysts say all these, point to a great potential for agricultural trade between China and the United States.

The US Secretary of Agriculture, Sonny Perdue, who joined a ceremony marking the return of US beef in Beijing in late June by slicing a Nebraska prime rib, told the media that more low-cost but quality agricultural products from his country are expected to hit the Chinese market in the future. That could partially make up the losses for American farmers after the country’s withdrawal from The Trans-Pacific Partnership, a trade deal that does not include China.

There is indeed much market potential for US farm products in China, including beef, poultry, and pork.

For the U.S., one of the biggest beef exporters in the world, it could hardly resist the temptation to tap the vast Chinese market, which imported beef worth 2.6 billion US dollars last year, and is considered the fastest-growing one in the world. More exports of beef could help optimize the US-China trade structure.

New statistics from China’s Commerce Ministry show bilateral trade reached some 220 billion US dollars last year in the first five months of 2017, with China importing about 64 billion dollars of US goods ranging from crude oil, soybeans to machinery and transportation tools.

From a Chinese perspective, there is indeed a concern among domestic cattlemen and industrial officials, who believe the alleged cheaper US beef poses a major challenge to Chinese products. This assumption is partially fueled by early media reports predicting US beef may hit the shelves in Chinese supermarkets with a price tag of only 20 yuan per kilogram.

However, this estimate is not well-grounded at all, and there are plenty of facts that portray quite a different picture, coming as a relief to many domestic beef producers, at least for now.

For instance, on Womai.com, a major Chinese online store known for providing authentic foreign foodstuffs, US beef rib is priced at 210 yuan per kilogram; a pre-sale page on another online food store, fruitday.com, shows a premium US steak is 108 yuan per 200 grams. That is equal to as high as 540 yuan per kilogram!

Some may say that China’s growing middle class may not raise their eyebrow over the higher-than-expected price, as they are more open to experience the quality of life in the West, including healthier sources of protein and better meat in terms of texture. Some food connoisseurs can even single out the best steak by color and marbling.

In spite of this, no one can deny the fact that ordinary and low-income people account for a relatively larger share of the total population of some 1.3 billion here in China. The story is the same when it comes to the online population in the eastern Asian country. Given that many web users are conscious of value for money when purchasing online, it’s less likely for them, especially those in rural areas, to go for the beef from the other side of the Pacific, at least in the foreseeable future.

People may easily associate the hefty US beef price to supply shortage, as some US officials say it takes time to develop a market and immediate huge beef sales are not realistic.

There are also some underlying reasons behind this situation, which requires a thorough understanding of the regulation governing US beef imports.

According to the agreement between Chinese and US officials, imports of beef must come from cattle less than 30 months of age, which is subject to a traceability system in relation to birth farm or first place of residence.

In addition, for food safety reasons, the Chinese authorities also require imported US beef to be free from chemical compounds such as ractopamine or growth hormone injections.

According to US standards, beef is rated in eight quality categories, namely, prime, choice, select, standard, commercial, utility, cutter and select. US experts have reportedly said only about ten percent of the total US beef meets the Chinese requirement.

Having explored the issue, it could be said that US beef is not going to flood the Chinese market in the near future, and domestic beef suppliers should take this “grace period” to think about how to produce better beef products to cater to consumers in the populous country, such as modern methods of mass production, stringent food safety standards, and effective brand strategy.