Will the Trans-Pacific Partnership Rally Cattle Markets? (VIDEO)

February 5, 2016 04:10 PM

Trade has been top of mind for beef producers this past year as export volumes dropped and cattle prices have fallen. A rally could be around the corner with the Trans-Pacific Partnership (TPP) being signed by 12 member countries on Thursday.

The trade agreement might be one of the biggest opportunities to turn-around a sliding cattle market.

“When you look at the downward pressure we’ve had in the markets over the tail end of 2015 and now into 2016, we’re trying to find all the value we can,” says Colin Woodall, vice president of government relations with the National Cattlemen’s Beef Association (NCBA).

Exports and offal took a $200/head hit in value during 2015, according to CattleFax analysts. The beef export market was down 1.5 billion lb. in 2015, a loss of $2.9 billion from the previous year.

Overseas TPP trade partners like Japan will pay a premium for offal products such as beef tongue, but tariffs are limiting those exports.

Woodall says there is currently a 38.5% tariff tax imposed on exports to Japan.

TPP would drop the tariff to 9% on most cuts of beef and no tariff would be imposed on beef tongue.

“That is something where we can make money and that is why we are supporting TPP,” Woodall adds.

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The Japanese market accounted for $1.6 billion in beef export sales during 2014. Kent Bacus, director of legislative affairs with NCBA, says there is plenty of demand for U.S. beef by Japanese consumers.

“Unfortunately, the longer the U.S. and members of Congress sit on TPP the further behind we’re going to slip in that market,” Bacus says.

Australia currently has a 10% tariff advantage in Japan and has been gaining market share. Meat & Livestock Australia claims exports to Japan increased 2% in 2014, prior to the Japan Australia Economic Partnership Agreement being signed on Jan. 15, 2015.

TPP still has to be voted on by Congress, and it likely won’t happen until November after the presidential election. Five other countries will have to ratify the agreement, as well. 

More on TPP from AgDay:

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