Earlier this month, the U.S. Department of Agriculture updated the nation’s stance on beef imports with regard to bovine spongiform encephalopathy (BSE), the fatal affliction in cattle commonly known as “Mad Cow Disease.” The U.S. is moving to adopt international standards set forth by the World Organization for Animal Health, which bases trade policies on the scientifically perceived risk of animals or animal products harboring the disease. While many experts do not believe the move will significantly impact beef imports, the new stance may help smooth negotiations when it comes to beef exports from the U.S. in the coming years. But the U.S. cattle herd has been shrinking since its peak of 115 million in the 1980s. Due mainly to feed prices and drought, today’s population sits at just over 90 million, down to numbers not seen since the 1950s. At the same time, global demand for beef is on the rise as countries such as China strengthen economically and adopt more protein-heavy diets. What kind of beef products does the U.S. import and what do U.S. beef producers ship to other countries? What trends are emerging and what rules dictate how the global beef trade plays out? Roughly 8 to 10 percent of beef consumed in the U.S. is imported from other countries, while 11 to 14 percent of the beef raised in the U.S. is sent elsewhere. The global beef trade is a complex web of supply and demand, based largely on the differences in what each society values from their cattle. Hamburgers and Hot Dogs: Not All That American After All The primary driver for U.S. beef imports is the fact that our cattle are just too fat. Or, at the very least, our ground beef is too fatty. Foreign beef most commonly makes it to the U.S. in the form of lean, grass-fed beef. Domestically, the U.S. produces ground beef categorized as “50s,” a mixture of 50-percent lean beef trimmings and 50-percent grain-fed cattle fat. The fat ratio is too high to sell as hamburger without mixing in leaner products from grass-fed imports or older, leaner cows in the domestic supply. This beef – several billion pounds a year – comes from Canada, Mexico, Australia, New Zealand, and Central and South American countries such as Nicaragua, Brazil and Uruguay. While most of that comes as lean beef used in hamburgers and hot dogs, U.S. companies also import products such as corned beef from South America, or pre-cooked beef products used in frozen dinners or canned soups. The lack of mad cow disease in South America means the region faces no restrictions for that disease, although countries such as Argentina and Brazil do face hurdles when it comes to hoof-and-mouth disease, said Laurie Bryant, executive director and secretary of the Meat Importers Council of America. Currently, Argentina and nearly every state of Brazil can only ship pre-cooked meat to the U.S. because of the disease. That means none of Argentina’s renowned steaks in fresh, chilled or frozen form. “That’s a significant strain on them,” Bryant said. Argentina has taken up the issue with the World Trade Organization. U.S. Beef to the Top Bidder There are many parts of a cow that American consumers don’t want but that others around the world are willing to pay good money to enjoy. In other cases, foreign customers outbid Americans for prized cuts. Take the heart, for example. Other than a few select ethnic markets, American grocery retailers can’t find much use for selling hearts. But in Peru, upper-end restaurants sell beef hearts as an entrée. “There’s a big difference in value between exporting beef heart to Peru for a nice restaurant versus making it into dog food here,” said Joe Schuele, communications director for the U.S. Meat Export Federation. Japanese customers will pay as much as $6 a pound for cow tongue. In years past, the chuck roll was often ground up into hamburger, but these days it has become extremely popular in Asia, Schuele said. South Korea, Taiwan, Japan and Hong Kong all compete for premium cuts of American beef. Egypt is a big market for beef liver. Nearly 20 percent of beef eaten in Canada comes from the U.S. Not Everyone Wants U.S. Meat Up until this year, Russia was a major buyer of beef liver. That changed in February when the country began enforcing a ban on meat containing ractopamine, a growth promoter used in the U.S. meat industry. Russia said the move was a response to the U.S. government failing to develop a program to ship beef that did not contain ractopamine or other so-called beta agonist drugs. In turn, the U.S. Department of Agriculture last week introduced a new certification program for meat raised without beta agonists, which means it could feature a special label. Similarly, the European Union prohibits imports of meat raised with growth hormones such as estradiol, progesterone and testosterone. Mad Cow Disease: A Thing of the Past? When the first case of BSE appeared in the U.S. in 2003, Japan cut off all U.S. beef trade, causing a significant blow to beef exports. In 2005, Japan reopened trade to beef from the U.S., but restricted it to cattle younger than 20 months of age. But that age limit really held exporters back, Schuele said. Japan recently extending that age limit to 30 months, which Schuele said has been much less limiting on exports. This year, the beef trade has bounced back to pre-2003 revenue numbers in Japan. Just in the year since extending the age limit, the volume of beef exports to Japan has increased by 52 percent and profits are up 35 percent, topping $1.1 billion in the first three quarters of 2013. That country has retaken its position as the top importer of U.S. beef. “When you look at the results, it’s pretty clear that was a big obstacle,” Schuele said. “The prediction that we’d see a surge in exports to Japan has certainly happened.” Mainland China still has a ban on U.S. beef because of BSE. Not only does that close off a large potential market for exports, but China has now begun importing beef products from Australia, New Zealand and other countries that would have normally been destined for the U.S. in years past, said Bryant at the Meat Importers Council of America. “China is certainly a major market for beef, but we don’t currently have access,” said Jim Herlihy, vice president of information services of the Meat Export Federation. But many in the beef trade believe BSE is an issue of the past and will become even less of an influence on trade in the years to come. “BSE has essentially been stamped out,” Bryant said. “There are much more serious food-safety issues in general, not talking about beef specifically.” One issue impacting the beef trade more seriously than BSE, according to some exporters, is tariffs. Japan, for example, places a 38.5 percent tax on its imports. South Korea has gradually been reducing its tariffs via a 15-year plan to decline from 40 percent down to zero, according to Schuele. Still, this month’s decision by USDA to adjust its stance on BSE could give American beef producers an easier time making export deals over the long run. “It gives us firmer ground to stand on when we negotiate beef access with other trading partners,” Schuele said. “We always maintained that we wanted our partners to follow sound science and be consistent with international guidelines when we weren’t necessarily doing that ourselves when it came to BSE.” If China and Russia reopened their borders to U.S. beef, Schuele said he could see U.S. beef exports go from 14 percent of the total supply into the high teens. By comparison, the U.S. pork industry exports about 27 percent of its product. Reducing trade barriers ultimately leads to greater availability of beef to customers around the world, he noted. “To turn a profit,” Schuele said, “the product needs to find the home that values it most.”