The U.S. Department of Agriculture’s (USDA’s) Foreign Agricultural Service (FAS) recently reported that the government of Brazil subsidizes Brazilian cattle production to the tune of about $1.2 billion in U.S. dollars. The purpose of the government subsidy is to increase Brazilian cattle raising productivity, its herd quality, and its acquisition of high-quality seed stock.
Last week the USDA announced it is opening the United States market to imports of fresh Brazilian beef, which is produced under the Brazilian government’s subsidies.
“That will pit America’s family cattle farmers and ranchers against Brazil’s $1.2 billion in subsidies to its cattle industry,” R-CALF USA CEO Bill Bullard said adding, “That means our family farmers and ranchers will be competing against the Brazilian government’s treasury.”
According to the CME Group, a global securities and commodity exchange company, during the past two years, America’s cattle farmers and ranchers have been receiving prices well below the previous five-year average. Bullard said the income paid to America’s cow/calf producers was slashed nearly 20 percent last year compared to the average price they received during the five-year period from 2013 to 2017.
“It’s hard to pay off loans when your income is slashed that drastically.
“This is causing a critically serious economic cost-price squeeze for America’s cattle industry and unless prices improve quickly, the ongoing exodus of America’s family cattle farmers and ranchers will be markedly accelerated,” Bullard cautioned.
“The last thing America’s family cattle farmers and ranchers need right now is a flood of subsidized beef from Brazil that will most certainly destroy economic opportunities for many of them,” he said.
A Nov. 21, 2019, Reuters news article reported that November wholesale beef prices in Brazil were about $1.50 per pound in U.S. dollars. However, the USDA reports that U.S. wholesale beef prices in November were about $2.24 per pound.
Bullard says this means the Brazilian government’s subsidies help exporters keep the price of Brazilian beef 33 percent below the cost of U.S. beef.
“This is not a level playing field and there is nothing about this that is fair to either U.S. cattle producers or consumers,” he said.
When Congress repealed Mandatory Country-of-Origin Labeling (M-COOL) for beef in 2015, it repealed the requirement that beef imports, such as those from Brazil, must retain their foreign label through retail sale, meaning all the way to the consumer.
Bullard says this means that consumers will be paying the higher U.S. price for beef, but the beef may very well be cheaper beef imported from Brazil.
“The Secretary of Agriculture’s action of approving these subsidized Brazilian imports so they can undercut prices that America’s cattle producers need to remain profitable and viable is unconscionable. At the very least Congress must intervene by restoring Mandatory COOL for beef so the U.S. industry can at least begin competing against this subsidized foreign beef,” he concluded.
