The Van Trump Report

Big Shifts in US Beef Imports

As ranchers continue to battle severe drought conditions, the US cattle heard is expected to continue shrinking into 2023. As a result, US beef imports are expected to increase next year with Australia seen playing a starring role. That would mark a change from the last few years where several factors have depressed US beef imports from Australia while substantially increasing supplies from Brazil.

While the US is the biggest beef producer in the world, it is also the second largest beef importer, according to the US Department of Agriculture (USDA). Most US beef imports are lower quality meat known as “lean trimmings” that are used for ground beef. Australia has typically been the biggest supplier of beef trimmings to the US but major drought impacts in 2018 and 2019 helped drive the country’s 2021 beef supply to the lowest levels in decades.

The Australian herd witnessed strong rebuilding in 2022 thanks to a third year of ideal pasture conditions. Another important contributor is that beef prices along with labor shortages have resulted in some farms (particularly dairy) converting to beef production. USDA expects rebuilding to continue in 2023 but with rising female slaughter rates that should support even higher beef production. USDA notes that low female slaughter rates in 2022 is likely to push Australia’s herd size to well above pre-drought levels in coming years.  

Similar to the US, Australia has also experienced labor shortages that have impacted key industries, including meat processing. Most of Australia’s labor in the meat industry comes from overseas sources which was limited due to COVID-19 restrictions. This effectively limited the country’s ability to increase beef production in early 2022. Restrictions have since been relaxed but USDA notes that the number of migrants entering Australia has remained low in 2022.

US beef production in 2023 is forecast to decline nearly -7% to 12.02 million metric tons (MMT) versus 12.82 MMT in 2022. As a result, Australia’s 2023 beef exports are seen rising to 1.5 MMT, up +200,000 MT from 2022. However, USDA notes that this is still well below the country’s pre-drought export peak of 1.77 MMT in 2015. Total US beef imports in 2023 are expected to reach 1.54 MMT, up slightly from an estimated 1.53 MMT in 2022.

The US Foreign Agricultural Service (FAS) earlier this year issued a report reviewing tariff rate quotas (TRQs) on beef imports. Australia enjoys a duty free status under TRQ but had filled less than 30% of their 2022 quota rate of 378,000 metric tons as of October 31. An increase in Brazil beef imports has actually helped fill that gap. When considering all beef products (including those sold outside the quota), Brazil has been the US’s third-largest beef supplier in 2022.

However, Brazil does not have a country-specific TRQ with the US, therefore falls within the small “Other Countries” quota, which is only 65,000 metric tons. That quota was filled back in April, meaning shipments beyond the quota attracted a +26.4% duty. There has been some speculation that the US would consider adjusting the current quota arrangement to free up access for suppliers without a country-specific TRQ. FAS, though, says any changes to TRQ quantities or country allocations would require negotiations through the World Trade Organization (WTO), as well as negotiations between the US and the partner country. Meaning no changes are expected in the short-term. The “Other Countries” quota is on a first-come, first-served basis and Brazil is expected to remain the largest “Other Countries” TRQ contributor for the foreseeable future.

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