While, beef is as expensive as it’s ever been, President Donald Trump recently offered a solution while speaking to reporters on Air Force One.
“We would buy some beef from Argentina. If we do that, that will bring our beef prices down,” Trump said.
But is it that simple?
Derrell Peel, a professor of agricultural economics at Oklahoma State University, recently examined the question for Southern Ag Today. He spoke to Texas Standard about the factors affecting Argentina’s beef exports. Listen to the interview above or read the transcript below.
This transcript has been edited lightly for clarity:
Texas Standard: Well, you recently took a close look at Argentina’s international beef business. What do you make of the president’s proposition that we could lower prices here by taking more beef from Argentina?
Derrell Peel: Well, I think there’s several issues that you have to keep in mind with this.
One – a very basic one from the standpoint of U.S. beef imports – we do import a significant amount of beef, but Argentina represents only about 2% of that. So realistically, even if we significantly increase the amount relative to what we have been taking from Argentina, it wouldn’t really change things much in the U.S. side.
And their capacity to increase would be relatively limited. It would either come against their other export markets or at the expense of their domestic consumption in the country. So that’s one reason.
The other thing is the type of beef. Beef is not one thing – it’s many different products. Most of the beef we import is used for processing. It really goes into our ground beef market, which is a huge part of the industry and it’s important, but certainly Argentinian beef – or for that matter, imports from just about anywhere else – is not going to have any impact on steak prices in the U.S.
» RELATED: When will beef prices drop? We asked a rancher, a butcher and an economist
Well, bringing beef prices down, obviously, probably shoppers and grocery stores here in the U.S. would like that. But what about the people who raise cattle? I imagine ranchers might not be that thrilled.
Well, you know, the industry in the U.S. is very cyclical. It has been for well over a century.
And so we’re in one of those cyclical lows. It was exaggerated by drought. So we’re smaller than we intended to be. In terms of cattle inventories, we’re at multi-decade lows. And that’s what’s prompted the high prices that we see in the industry.
But, you know, we’ve been through this before and markets are pretty self-correcting. So high prices will provoke additional investment in future production and eventually that will lead to increased production in the U.S. and that will temper prices in the U.S. market.
So it takes time, but markets work if we let them work and that’s certainly what ranchers would prefer, I think.
Well, getting back to Argentina, is there something special about Argentina and the idea to import beef to drop the price? Why not cast a wide net with other trade partners. You mentioned we get beef from other places.
Well, you know, I don’t want to get off into politics. That’s not my realm. I can hardly figure out cattle markets. But I think this is very much a political thing relative to President Trump’s relationship with the president of Argentina, and so I think it really lands there more than anywhere else.
There are certainly other markets if we wanted to stimulate some additional imports to help temper prices in the U.S. For example, Brazil in the first seven months of this year exported more than 10 times as much beef to the U.S., as did Argentina. And of course, we’ve got extra tariffs that are going to cause that to fall in the future once we start getting data again.
And so, you know, if you really were interested in imported supplies in the U.S. and the potential implications or impacts on the U.S. beef prices, there’s other markets you would look at than Argentina.
» GET MORE NEWS FROM AROUND THE STATE: Sign up for Texas Standard’s weekly newsletters
Well, let me ask you about Mexico, because obviously there have been some concerns about the cross-border exporting. Where do we stand there? It seems like a neighbor would be a good place to import beef.
Yeah, so, you know, we have a very integrated market situation with Mexico that’s evolved over several decades here. So we import beef from Mexico, we export beef to Mexico, and of course traditionally we import cattle from Mexico for many, many years we have. That’s not happening right now because of the screwworm threat.
So the borders closed, we’re not getting those additional feeder cattle which would play into our beef supplies in the U.S. It’s making a tight situation even tighter.
As far as the beef trade, again, that’s market-driven. We import and export products simultaneously because they’re different products and going to different subsets of the market, if you will. Those things are working as we expect them to and as they naturally work in a market environment.
If you found the reporting above valuable, please consider making a donation to support it here. Your gift helps pay for everything you find on texasstandard.org and KUT.org. Thanks for donating today.
