Where's the Arkansas Beef? Headed to China (Jennifer Cook Commentary)

by Jennifer Cook  on Thursday, Aug. 10, 2017 1:31 pm   3 min read

Jennifer Cook, owner of the 5C Cattle Co. in Wooster (Faulkner County). (Submitted photo)

I believe there are brighter days ahead for Arkansas cattle ranchers, and I speak from experience — good and bad. 

I've been raising beef cattle in Arkansas for 10 years, but my first experience raising beef cattle wasn't exactly a positive one. Growing up in a government-subsidized home in Lake City, we didn't have cash laying around, so I went to the Bank of Northeast Arkansas and borrowed $650 to buy my first steer for an FFA agricultural project. On the way to my first livestock show, that steer escaped and died from a heart attack on the site of what is now a Western Sizzlin in Jonesboro. 

In the end, I made exactly $1.27 profit off the beef from that steer, after I paid off my bank note. 

Thankfully, that experience didn't turn me off livestock and my luck raising beef cattle improved substantially. In truth, it was hard work and experience that helped me get where I am today, but fortune does play a role in my world, particularly when it comes to things beyond my direct control, such as pricing or international trade. And now that China and the U.S. have finally come to an agreement to import American beef, I think the collective luck of Arkansas beef producers just got better.

Most Americans and Arkansans are far removed from where their food is produced and, unfortunately, most only hear about food production through opinionated blogs and social media posts. Thus, the general population probably has no clue why this renewed beef trade with China is important for beef producers like me or for our state's economy, which saw around $600 million from beef sales in 2016. 

Since the incident back in 2003 with BSE (or "mad cow disease," as most of us know it) the Chinese market for beef from the U.S. has been closed, but the potential for U.S. beef producers in this reopened relationship is significant. 

I dug into some numbers from an economist friend with Arkansas Farm Bureau and the numbers were eye-popping. 

Currently, the U.S. exports 12.5 percent of its beef production — about 1.2 million metric tons valued at $6.34 billion. This level of export results in $270 per head of beef slaughtered. In other words, somewhere between 12 and 13 percent of the value of cattle is attributed to our ability to export beef products and, at the current rate, each percentage of U.S. beef production exported adds just over $20 to the value of each animal sold.

Dealing with China specifically, the numbers get even better. China has a population of more than a billion, but only about 20 percent of its people are considered upper- to middle-class, making the type of wages and earnings that would enable them to buy U.S beef. But this 20 percent represents some 300 million people, meaning the likely potential is a populace roughly the same size as the U.S. domestic market.

If (or when) China returns to its pre-2003 level of beef imports, it could add as much as $30-$50 per head to the value of U.S. cattle, or $15-$25 per head for Arkansas cattle producers.

So, what does this mean for me, personally? It's hard to tell yet, but I think it could open up a new world of possibilities. 

My family consists of my husband, myself and our three boys. We own 10 acres where the boys' Hereford show cattle reside, but we lease another 80. Every fence post, squeeze chute, roll of barbed wire and even our cattle trailer has been purchased by us, and typically pre-owned. We have a dozen commercial mama cows and fifteen registered Hereford cows, a couple of bulls, several steers we are feeding out for customers, lots of baby calves this time of the year, and one beloved Belted Galloway heifer named Noelle. 

We are not a big deal, but the average size beef cattle operation in Arkansas is just under 40 head. China trade could mean growth for me and for many other ranchers I know. 

As a first generation cattle producer and a University of Arkansas agriculture graduate, I know I need to be profitable and I understand how hard it is to reach profitability in this business. As the wife of an experienced financial planner, I know that my cattle operation is the source of some tense conversations in our home. The opening of the China market could go a long way to easing some of our financial concerns and make for more pleasant dinner conversations. 

In the end, food is what sustains us and keeps humanity going, not our smart phones and computers (contrary to what my children may believe), and the food we provide is critical to the world. We still face a major trade deficit with China, but U.S. farmers and ranchers are ready and willing to help narrow this very large gap. 

The conditions of the trade deal do leave some hoops to be jumped through, particularly as it relates to tracing where all of our shipped cattle come from. There will also be competition from other countries. Nevertheless, we can and will work through these challenges. It's simply too important not to. 

(Jennifer Cook owns the 5C Cattle Co. in Wooster (Faulkner County)).

 

 

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