Beef Exports at Higher Value than U.S. Sales

July 19, 2002

USDA estimates that about 9% of U.S. beef production is exported, and a new study indicates that 55% of beef variety meats are exported at incrementally much higher values than if sold in the United States. In addition, higher international prices paid for beef cuts underutilized in this country contributed more than half of the added value resulting from access to international markets.

Reported by U.S. Meat Export Federation Technical Services Vice President Paul Clayton during the Beef Industry Research and Technical Services Update Session in Reno, the study found that exporting beef and beef variety meats accomplished three things: it raised the number of potential customers and resulting aggregate demand; it increased the value of U.S. products by allowing sellers to find buyers willing to pay the highest price globally, not just domestically; and the total value of exports amounted to the equivalent of $12.45 per hundredweight on fed steers.

The study collected data through USMEF's worldwide network and compiled this data with methodology reviewed and approved by Denver-based CF Resources. The study set out to rank the top 10 U.S. beef export items to 12 major markets, then determine and verify, through a number of independent databases, the volumes and values provided by USMEF international staff. The study was funded by state beef councils with beef checkoff dollars.

"While the domestic value of variety meats is very low and so the extra value from exporting these items disproportionately high, variety meats only accounted for 40% of the $1.2 billion of extra value [added through exports]," the study notes. "The additional value of exporting underutilized items from the carcass, such as short ribs and short plate, accounted for 60% [of the added value].

"If every consumer in the world had the same preferences and tastes for beef," the study adds, "then the price of beef would only differ across markets by the amount of transportation and transfer costs. If this were the case, then the only benefit of exporting would be to remove supply from the domestic market and apply upward pressure on prices through the supply response." But the study found a large difference in the values of many items depending on whether or not they could be sold on the international market."