The North American Free Trade agreement has helped grow the U.S. beef industry beyond its borders. While some are pleased to see the Trump administration renew its commitment to free trade with Mexico and Canada through an updated trade deal, others would like to see more protection from foreign competitors.
On November 30th, the presidents of the U.S., Canada and Mexico all signed an updated free trade agreement meant to replace the North American Free Trade Agreement.
In the beef industry, NAFTA has become part of a border-blurring, multinational production system. Cattle raised in Nebraska don’t stay in Nebraska, or even the United States.
“When you process one of these animals, it doesn't go to the same place. You have pieces that go everywhere,” said Craig Uden as he walked down an alley in Darr Feedlot, a cattle feeding operation he co-owns near Cozad in central Nebraska. Hulking feed trucks cruised along concrete troughs, unloading piles of ground up hay and corn.
Uden says meat companies sell cuts of beef where they bring the best prices. Steaks and hamburger do well in the U.S. while other cuts sell better overseas.
“The chuck roll, that could be destined for Asia, and the tongues maybe to go Japan, and the oxtail maybe goes to Europe,” Uden said.
NAFTA is part of how this works. Cattle from Mexico and Canada are imported to feedlots and packing plants in the U.S., tariff free. From there they become part of the beef supply parceled out on the export market. Uden says when consumers have more supply of the meat they prefer, it boosts demand for everyone.
“It's a re-balancing,” he said. “If they want high quality in Canada, we've got plenty of high quality extra beef that we can ship to Canada. If Mexico takes some of our lower quality product. If it adds value to the bottom line of the beef produced in the United States, you bet.”
If NAFTA were dismantled, as President Trump has sometimes threatened, Uden fears the U.S. would be saddled with more beef than Americans could eat, causing an oversupply that he says would be felt beyond the beef industry.
“It presses back down to the grain markets and the hay markets and the ethanol production,” Uden said. “So it’s never been a good idea when you’re a state like Nebraska that relies on agriculture as your number one economic driver.”
But there are some in the cattle business who believe NAFTA has done more harm than good. On a ranch near Neligh, Nebraska, David Wright and his family raise calves that eventually grow up to go to feedlots.
Wright would like the Trump administration to protect cattle producers from the free trade facilitated by NAFTA. Echoing the recent debates over steel and solar panels, he says cheap cattle from Canada and Mexico undercut his business.
“The cost of living or production in other countries is different than it is here,” Wright said. “As long as we're one of the highest economies in the world, I don't see a lot of advantage in us trading for something that we already produce.”
Last year, the U.S. exported nearly $2 billion of beef to Canada and Mexico, but also imported millions of cattle from the two countries. Wright says those animals compete for space at feedlots.
“Someone tell me how that's good for the producer here, who's paying the real estate taxes to keep the school open, doing business trying to keep the town open, as opposed to the guy in Canada who's really not,” Wright said.
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