China market could make beef boom in Montana

SUBMITTED PHOTO/Montana Stockgrowers Association Miles City cattleman Fred Wacker, shown above, is optimistic that the Chinese market will reopen to U.S. beef imports, providing an economic boost to eastern Montana.
STAR PHOTO/Dan Killoy Cattle wait in the feed lot at Cross Four Ranch this month.

A recent trip to China by a congressional delegation headed by U.S. Sen. Steve Daines (R-Montana) could pay big dividends for the cattle business in eastern Montana and across the state. 

The delegation was attempting to get China to clear away obstacles to importing U.S. beef in the nation of 1.4 billion consumers.

A total ban on U.S. beef imports that had been in effect since 2003 — the result of concerns about Mad Cow disease — was lifted last  September, but restrictions remain.

Beef from cattle older than 30 months is still banned, and the U.S. must comply with China’s rigorous traceability and quarantine rules.

Still, industry officials say they are optimistic that exports to China could be resumed in as little as 60 to 90 days.

One of the reasons that industry officials are optimistic about the potential to renew shipping to China is cattle like those produced by Miles City cattleman Fred Wacker and his family in Custer and Rosebud counties.

While in China, Daines presented China’s Premier Li Keqiang with a cooler filled with beef steaks produced on the Wacker ranch — The Cross Four Cattle Ranch and feedlot — that he hand carried on the flight 

“The family ranch operated by the Wacker family produces exactly what the Chinese are demanding,” Daines said.

Fred Wacker said the dilemma amounts to a marketing issue.

“This is basically a marketing issue. The customer is demanding certain qualities in the products that they are purchasing and we as cattle suppliers are determined to meet those demands,” said Wacker, one of the producers that deliver All Natural Beef to consumers around the world. 

Wacker’s ranch ships its cattle for processing to Tyson-Open Prairie National Beef, which harvests approximately 2,500 head per week. 

The All Natural Beef designation is simple — no antibiotics, no added hormones, no steroid implants and no animal byproducts can be fed to the cattle.

“We buy SAV — ‘Source and Age Verification’ — calves from over 50 ranches, the majority in Montana and some from northern Wyoming, usually in September when they are weaned from the mother,” noted Wacker. 

The source and age verifying for each animal is done by an independent source, which guarantees the lineage of the calf and is extremely important in sales of the product in foreign markets, especially China. 

The potential for shipments to China has created a buzz among domestic cattle producers.

Errol Rice, president of the Montana Stockgrowers Association, told the Star he is “more optimistic than he has been in a long time” about the prospect. But he said he believes it will be closer to a year before the Chinese market is open to U.S. beef.

Rice said there is “no confirmed timeline” for the beginning of exports to China but “we are closer than we have been since 2003.”

Rice also said that prior to the 2003 ban, beef imports from the U.S. to China were “minimal.” However, in the past decade, China has developed a rising middle class that demands beef.

“I have heard that we may get to start exporting beef to China,” Levi Forman, president of the Custer/Fallon Farm Bureau, said in an email to the Star. “Obviously it’s a huge market so I would hope that it would help our calf prices. It’s an exciting prospect to me, but I can’t really say I have any insight into when it will happen or how significant the impact could be.”

Dale Barta of the Montana Farm Service Agency in Miles City said the prospect of shipping to China is tantalizing. “More exports is great,” he said.

Wacker said he believes the U.S. cattle industry could produce around one million fat cattle in the first 12 months for the Chinese market.

China imports around 825,000 tons of beef, much of it from Australia, which produces mainly grass fed animals. “Which isn’t as tasty a cut of beef as that produced in the U.S. markets,” exclaimed Wacker. 

Rice said that Brazil, Argentina and Uruguay are also major exporters of beef to China.

Although the 60-90 day time frame may be somewhat ambitious, the cattle producers expressed confidence that the Chinese market will reopen. “This opportunity comes along at the perfect time. Sen. Daines is the natural champion of this endeavor. He speaks fluent Chinese, and he is devoted to the ranching and farming industry in Montana,” Wacker said.

Daines had said that the future of the deal was directly tied to the confirmation of Sunny Perdue as the next Secretary of Agriculture, so the prospects improved when Perdue was confirmed by the U.S. Senate last week. 

“With a new secretary of Agriculture who is marketing-minded, we are extremely well-placed to move forward with this venture,” Wacker said. 

Exports of other products from Montana to China are already common. China is Montana’s third-largest trading partner behind Canada and South Korea.

Wacker noted that exports are crucial for the industry, with 95 percent of the world’s consumers located outside the U.S.

Daines agreed. “Expanding export opportunities for Montana products is critical for the future of Montana farmers, ranchers and businesses,” he said.

Rice said that the current Asian markets for U.S. beef include Japan, which imports $1.5 billion of beef annually, followed by South Korea ($1 billion) and Hong Kong (nearly $1 billion). The market for China, with a population of over a billion people, could be even greater.

“In the context of value to a rancher in Miles City, exports add about $350 per head in value” to each sale, Rice noted.

The Chinese ban on U.S. beef imports was initiated as a result of Bovine Spongiform Encephalopathy, also known as Mad Cow Disease.

It was first detected in 1986 in the United Kingdom, where 180,000 animals were infected and 4.4 million were slaughtered during the eradication effort.

The first case in North America was in 1993 in Canada, followed by the first case in the U.S. that December involving a cow born in Canada. 

China instituted the ban when the U.S. Department of Agriculture confirmed the first case of domestic Mad Cow Disease in a cow in Texas.