Beef Went International Under NAFTA, Some Ranchers Say It Went Too Far
By Grant Gerlock, Harvest Public Media
Dec. 26, 2018, 8:45 a.m. ·
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The North American Free Trade agreement has helped grow the U.S. beef industry beyond its borders. While some are pleased to see the Trump administration renew its commitment to free trade with Mexico and Canada through an updated trade deal, others would like to see more protection from foreign competitors.
On November 30th, the presidents of the U.S., Canada and Mexico all signed an updated free trade agreement meant to replace the North American Free Trade Agreement.
In the beef industry, NAFTA has become part of a border-blurring, multinational production system. Cattle raised in Nebraska don’t stay in Nebraska, or even the United States.
“When you process one of these animals, it doesn't go to the same place. You have pieces that go everywhere,” said Craig Uden as he walked down an alley in Darr Feedlot, a cattle feeding operation he co-owns near Cozad in central Nebraska. Hulking feed trucks cruised along concrete troughs, unloading piles of ground up hay and corn.
Uden says meat companies sell cuts of beef where they bring the best prices. Steaks and hamburger do well in the U.S. while other cuts sell better overseas.
“The chuck roll, that could be destined for Asia, and the tongues maybe to go Japan, and the oxtail maybe goes to Europe,” Uden said.
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Free trade allows meat companies like Tyson Foods to add to their cattle supply and tailor exports to different markets. (Photo by David Barry, NET)
NAFTA is part of how this works. Cattle from Mexico and Canada are imported to feedlots and packing plants in the U.S., tariff free. From there they become part of the beef supply parceled out on the export market. Uden says when consumers have more supply of the meat they prefer, it boosts demand for everyone.
“It's a re-balancing,” he said. “If they want high quality in Canada, we've got plenty of high quality extra beef that we can ship to Canada. If Mexico takes some of our lower quality product. If it adds value to the bottom line of the beef produced in the United States, you bet.”
If NAFTA were dismantled, as President Trump has sometimes threatened, Uden fears the U.S. would be saddled with more beef than Americans could eat, causing an oversupply that he says would be felt beyond the beef industry.
“It presses back down to the grain markets and the hay markets and the ethanol production,” Uden said. “So it’s never been a good idea when you’re a state like Nebraska that relies on agriculture as your number one economic driver.”
But there are some in the cattle business who believe NAFTA has done more harm than good. On a ranch near Neligh, Nebraska, David Wright and his family raise calves that eventually grow up to go to feedlots.
Wright would like the Trump administration to protect cattle producers from the free trade facilitated by NAFTA. Echoing the recent debates over steel and solar panels, he says cheap cattle from Canada and Mexico undercut his business.
“The cost of living or production in other countries is different than it is here,” Wright said. “As long as we're one of the highest economies in the world, I don't see a lot of advantage in us trading for something that we already produce.”
Last year, the U.S. exported nearly $2 billion of beef to Canada and Mexico, but also imported millions of cattle from the two countries. Wright says those animals compete for space at feedlots.
“Someone tell me how that's good for the producer here, who's paying the real estate taxes to keep the school open, doing business trying to keep the town open, as opposed to the guy in Canada who's really not,” Wright said.
There are fewer farms raising cattle since NAFTA went into effect, according to figures from the Department of Agriculture. The number of cattle feedlots has dropped sharply. Wright says if NAFTA remains unchanged, that trend will continue.
Craig Uden blames concentration in the beef industry on the cost of labor and keeping up with environmental rules. And, he says, Canada recently started buying large numbers of cattle from the U.S.
The direction NAFTA turns under the Trump administration is not the only issue on the minds of cattle producers. Uden says he was glad tax cuts were passed, for instance, but he says NAFTA cuts straight to the bottom line of his business.
“If you don't have profit in your industry, the tax break doesn’t do us a lot of good,” Uden said. “We have to have both.”
David Wright has been encouraged by economic growth and new jobs created so far under Trump. He says putting protections in NAFTA for American workers would reinforce that, and help them buy more steak dinners.
“If we're sending jobs over to other countries, then what are our citizens doing to earn a living?” Wright said. “Because if they don't have revenue to spend on the product that I'm trying to sell, then I guess i don't have a product to sell.”
He says that’s what’s in the balance as the Trump administration continues talks on trade.
Editor's note: This story is part of our "Best of 2018" Signature Story report. The story originally aired and was published on March 20, 2018.
Harvest Public Media is a reporting collaboration focused on issues of food, fuel and ﬁeld. Harvest covers these agriculture-related topics through an expanding network of reporters and partner stations throughout the Midwest.
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