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  • Unpacking the Success of U.S. Beef in Japan

    Unpacking the Success of U.S. Beef in Japan

    Japan is one of the largest beef importing countries in the world and stands out among major destinations for the U.S. In 2023, U.S. beef exports totaled $10 billion, with nearly $2 billion going to the Japanese market. This was only surpassed by exports to South Korea ($2.1 billion). However, Japan has been the leading U.S. market until recent years (USDA, 2024). It was not long ago when U.S. beef was outright banned in Japan due to BSE concerns (2004-2006) and was still somewhat restricted even after the ban was lifted (Muhammad et al., 2016). However, since then, the U.S. has been regaining market share and is once again the leading supplier of imported beef in Japan. This article focuses on the success of U.S. beef in Japan, highlighting the competition between the U.S. and Australia. Japanese beef imports have been relatively split between the U.S. and Australian beef – together, both account for around 80% of Japan’s total imports. Interestingly, the U.S. and Australia have similar but competing trade agreements with Japan: the U.S.-Japan Trade Agreement (USJTA) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and face near identical reductions in beef tariffs since January 2020.

    Annual quantity shares for beef exporting countries in Japan (e.g., Australia, U.S.) are reported in Figure 1. Import quantities have not significantly changed since 2000, and recent highs in export values (e.g., $4.9 billion in 2022) were mostly due to relatively higher prices (Trade Data Monitor®, 2024). Since quantities have been relatively unchanging, the change in shares reported in the figure reflects substitutions across countries. Prior to the BSE ban in 2004-2006, U.S. beef accounted for more than 50% of Japanese beef imports but decreased to almost 0% during the BSE ban period. Since 2006, however, the U.S. beef share has steadily increased to around 40% by 2017, peaking at 44% in 2020 when the USJTA entered into force, while the share for Australia decreased from more than 80% in 2006 to 41% by 2020. It is important to note that the declining share for Australia starting in 2018 was also due to increased exports from countries other than the U.S.

    In terms of value, the U.S. currently exports significantly more to Japan than Australia. For instance, in 2022, when U.S. beef exports reached a record high of $2.3 billion, Australia exported only $1.6 billion. Noted reasons for higher U.S. values include the following: relatively higher prices for grain-fed U.S. beef; the fact that the U.S. mostly exports brisket, plate, chuck, and round, whereas Australia mostly exports chuck, round, loin, and other cuts; and the U.S. dominates the beef offal market in Japan where chilled offal (internal organs and cheek meet) and frozen beef tongue sell anywhere from 50% to 100% more than the traditional muscle cuts and beef product (Trade Data Monitor®, 2024).

    Figure 1. Quantity shares of Japanese beef imports by exporting country: 2000–2023

    Note: CPTPP is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, and USJTA is the U.S.-Japan Trade Agreement.
    Source: Trade Data Monitor® (2024)

    References

    Muhammad, A., K.E.R. Heerman, A. Melton, and J. Dyck. 2016. Tariff Reforms and the Competitiveness of U.S. Beef in Japan. LDPM-259-01. Economic Research Service, U.S. Department of Agriculture. https://www.ers.usda.gov/publications/pub-details/?pubid=37650

    U.S. Department of Agriculture (USDA). 2024. Global Agricultural Trade System. Foreign Agricultural Service. https://apps.fas.usda.gov/gats/default.aspx

    Trade Data Monitor (2024). https://www.tradedatamonitor.com/

    Muhammad, Andrew. “Unpacking the Success of U.S. Beef in Japan.” Southern Ag Today 4(20.4). May 16, 2024. Permalink

  • Cover-crop Acres up in Texas, Stagnant Across Rest of the South

    Cover-crop Acres up in Texas, Stagnant Across Rest of the South

    The USDA recently released data from the 2022 census of agriculture. In 2022, cover crops were planted on 6.2% of the total cropland acres in the South, surpassing the national average of 4.7% for the 48 contiguous states. In fact, the top five counties in the US in terms of percent of cropland in cover crops were all from the South, located in Virginia, Maryland, and Florida. However, there is substantial variation in the adoption of cover crops across counties, as shown in Figure 1. Maryland led the way with 27.3% of its total cropland acres in cover crops, followed by Virginia at 15.2%. On the other end of the spectrum, Louisiana and Arkansas had the lowest rates, at 3.2% and 3.4%, respectively. 

    Figure 1: 2022 Southern Cover Crop Adoption Rate by County, as Percent of 2022 Cropland

    Data source: 2022 U.S. Census of Agriculture 

    Between 2017 and 2022, there has been a significant change in cover-crop adoption across the southern states. Texas saw the largest increase in cover-crop area in the US, adding over half a million acres, corresponding to a 1.9 percentage-point increase as a percentage of 2022 cropland. The remaining states in the South combined for a net increase of just fifty-thousand cover crop acres. This was largely due to the disadoption of the practice, as six states observed decreases in cover-crop acreage from 2017-2022. In fact, 49.8% of counties in the southern states saw disadoption over the period – as demonstrated by the blue counties in Figure 2 – disadopting over one million acres of cover crops in total. Overall, the adoption of cover crops decelerated between 2012-2017 and 2017-2022, driven by the increased number of counties that experienced disadoption.

    Figure 2. Change in Cover Crop Adoption Rate by County (2017-2022)

    Data source: Authors’ calculations based on Census of Agriculture (USDA, 2024)

    These patterns help us understand how the cover crop adoption rate in the South has changed. The adoption of cover crops has expected benefits, including soil health, erosion control, weed and water management, and carbon sequestration. Patterns of adoption over time should reflect areas where realized benefits and any additional subsidy (state, federal, or private sector) outweigh the costs of implementation.  Similarly, disadoption is likely an indication of producers experiencing cover crop expenses that exceed any realized or perceived benefits. Acres fluctuating in and out of cover crops may have implications on the credibility and stability of voluntary carbon markets and contracts tied to the practice.  One thing is clear: the costs and benefits of cover crop systems are dynamic and can vary significantly by producer, commodity, and region.

    References

    U.S. Department of Agriculture. 2024. 2022 Census of Agriculture. Washington, DC: U.S. Department of Agriculture, National Agricultural Statistical Service.

    U.S. Department of Agriculture. 2019. 2017 Census of Agriculture. Washington, DC: U.S. Department of Agriculture, National Agricultural Statistical Service.

    Okonkwo, Emmanuel, Wendiam Sawadgo, and Alejandro Plastina. “Cover-crop Acres up in Texas, Stagnant Across Rest of the South.” Southern Ag Today 4(20.3). May 15, 2024. Permalink

  • Diamond Rings for Old Things

    Diamond Rings for Old Things

    In general, the only old things that have much value are those that are rare and in extremely good condition. For instance, a Rembrandt would be a good example of an old thing that has a lot of value, or a 40 series John Deere tractor would be another! However, slaughter cows would be an example of a fairly common thing that has a strong value in today’s market. Or, maybe they are not all that common since there has been tremendous herd liquidation due to drought the past couple of years.

    Slaughter cow prices generally reach their seasonal price peak in late spring or early summer. They may or may not have already peaked, but that is of little concern given the extremely high price level. Cow condition does influence their total value from both a weight and price standpoint, but slaughter cattle in most any condition are bringing a high price due to the need for lean grinding beef. Specifically, the boxed cow beef cutout value has increased from just over $200 to $270 per hundredweight since the beginning of the year.

    Figure 1 contains weekly slaughter cow prices in Tennessee for breaking grade cows. The price of this class of slaughter cows has increased in price by about $35 per hundredweight since the beginning of the year and are $20 per hundredweight higher than any point in 2023. Assuming a 1,200 pound cow, the total value has increased from $1,140 per head to $1,560 per head since the beginning of the year, which is a $420 per head increase. 

    The value increase in slaughter cows is being driven by cattle producers hauling fewer of these animals to town, which is seasonally driven by calving season being in full force and the fact that many cattle producers have already culled deep into the cow herd. The value of slaughter cows should remain high for the next couple of years.

    Figure 1. Slaughter cow prices for 2024, 2023 and the 5-year average.

    Griffith, Andrew P. “Diamond Rings for Old Things.” Southern Ag Today 4(20.2). May 14, 2024. Permalink

  • May WASDE Projects Higher Supplies and Lower Prices Again in 2024 

    May WASDE Projects Higher Supplies and Lower Prices Again in 2024 

    On May 10th, USDA released the latest World Agricultural Supply and Demand Estimates (WASDE) report. The May WASDE provides the first official projections for the 2024 marketing year from USDA and annual marketing year forecasts for the supply and use of various crops. Projections for production are based on the acreage reported in the March 28th USDA Prospective Plantings report, and yield forecasts are based on trend models or historical yields, depending on the crop. Thus, the USDA projections discussed below are subject to change as the growing season and marketing year progress. 

    U.S. corn production is projected at 14,860 million bushels, a 3% decline from the 2023 record of 15,342 million bushels. For 2024/25, U.S. corn production is based on 82.1 million harvested acres (5.1% decline from 2023) and a national average yield per harvested acre of 181.0 bushels. Combined with 2,022 million bushels of carryover stocks from last year and 25 million bushels of imports, the total U.S. corn supply is projected to be 1.1% higher than in 2024 at 16,907 bushels. Similar to 2023, the supply increase is slightly offset by a 0.6% increase in total use. Feed use is projected to increase by 50 million bushels, and ethanol use remains unchanged from 2023 at 5,450 million bushels. Exports are projected to increase by 50 million bushels to 2,200 million bushels, partially due to reduced expectations in exports for Brazil and Russia in 2024. Corn ending stocks are projected at 2,102 million bushels, a 4% increase from 2023. The average farm price is projected to continue the downward trend, at $4.40 per bushel, compared to $4.65 in 2023 and $6.54 in 2022. 

    U.S. soybeans are also projected to see higher supplies and lower prices in 2024. U.S. soybean production is projected to be 4,450 million bushels, a 6.8% increase from 2023. Some production increases are due to a higher expected yield of 52 bushels per harvested acre (compared to 50.6 in 2023) – also a record if realized. The 2024 average farm price is projected at $11.20 per bushel, an 11% decrease from 2023. Demand and exports are expected to improve from 2023, with domestic crushing and exports each projected to increase by 125 million bushels. However, supplies continue to outpace demand, with 2024 ending stocks projected at 445 million bushels, a 31% increase. 

    U.S. cotton producers are projected to plant 0.44 million more acres  in 2024, an increase that more than offsets the 6% drop in the national average yield, resulting in nearly 4.0 million more bales of production compared to the 2023 production estimate. The 2023 cotton crop saw 3.79 million acres of abandonment, with 10.23 million acres planted but only 6.44 million acres harvested. Drought plagued Texas again with abandoned acres in Texas accounting for 90% of U.S. abandoned acres. Currently, USDA projects 10.67 million acres planted with 9.13 million acres harvested in 2024. Drought conditions in Texas are not as severe as this time last year which may slightly alleviate the magnitude of abandonment. In the May WASDE, U.S. cotton production is projected at 16.0 million bales, a 33% increase from 2023. On the demand side, exports are expected to increase by 0.7 million bales to 13.0 million bales. Despite higher exports, cotton ending stocks are projected to increase by 1.3 million bales to 3.7 million bales on higher production. The average farm price is projected to weaken to 74 cents per pound, the lowest farm price since 2020. 

    Lastly, the carryover of long-grain rice from 2023 is relatively low compared to the last two marketing years at 18.0 million hundredweight, but increased production in 2024 will nearly eclipse the carryover. Long-grain rice production is projected to increase by 10% to 169.3 million hundredweight. Exports are expected to increase to 75 million hundredweight, which is largely driven by increased competitiveness in price and regaining the Mexico market lost to Brazil in 2023. Ending stocks are projected to be up 46% at 26.3 million hundredweight. Like other crops, the average farm price is projected lower to $14.50/cwt.

    Overall, the May 2024 USDA WASDE report projects a bearish supply and demand picture and lower prices compared to 2023. Figure 1 provides a snapshot of typical month-over-month movements in the five-year average of the Marketing Year Average (MYA) cash price received by farmers. This can provide an expectation of movements in a relatively more current window. The last pre-harvest price upside movement for long grain rice has recently been in August while the last pre-harvest upside price movement for cotton happens in July. Corn and soybeans follow a similar pattern with downward price movement in July through harvest in October. Taking advantage of upward price movement through a crop marketing plan as described by previous Southern Ag Today articles (Maples, 2022; Maples and Gardner, 2023; and Maples, 2024) is of the utmost importance.

    Figure 1. Month-over-Month Change in Five-Year Average MYA Price for Rice, Cotton, Corn, and Soybeans: 2019-2023

    References

    United States Department of Agriculture, Agricultural Marketing Service. (2023). World Agricultural Supply and Demand Estimates (WASDE-63). Retrieved May 10, 2024 from https://downloads.usda.library.cornell.edu/usda-esmis/files/3t945q76s/8910m7465/0p097p24j/wasde0523.pdf.

    United States Department of Agriculture, Agricultural Marketing Service. (2024). World Agricultural Supply and Demand Estimates (WASDE-64). Retrieved May 10, 2024, from https://www.usda.gov/oce/commodity/wasde/wasde0524.pdf

    Maples, Will. “Considerations for Developing a Pre-Harvest Marketing Plan.” Southern Ag Today 2(47.1). November 14, 2022. 

    Maples, William E., and Grant Gardener. “Using Historical Price Movements to Inform Marketing Decisions.” Southern Ag Today 3(51.1). December 18, 2023. 

    Maples, William E. “Cash Grain Contracts and When to Use Them.” Southern Ag Today 4(18.1). April 29, 2024. 

    Biram, Hunter, and Ryan Loy. “May WASDE Projects Higher Supplies and Lower Prices Again in 2024.” Southern Ag Today 4(20.1). May 13, 2024. Permalink

  • Southern Apples: The Long History of Production and the New Era of Marketing

    Southern Apples: The Long History of Production and the New Era of Marketing

    Apples are often viewed as a perennial crop commonly produced for fresh consumption in the Northeast and Pacific Northwest. However, Southern apple orchard production has a history that begins with the earliest settlers in Virginia around 1622 (Flynt, 2023). As heterozygous plants, each apple seed is a blend of parent tree genetics which spurs completely new varieties. In the South, these new varieties flourished for much of the country’s history until the early 1900’s when commercial apple production expanded in the Pacific Northwest. While apples in the South were used for eating raw, many were processed into an alcoholic beverage called hard cider. Much like wine, apple varieties have distinct flavor attributes that contribute to the taste and marketing abilities of hard cider. 

    After a decline in cider production and consumption that occurred during prohibition in the 1920s, production of Southern apples became a small part of agricultural productivity. However, the last 20 years have seen a renewed interest in craft, hard cider production and the revival of southern apples varieties such as Queen Pippin shown in Figure 1. Yet, marketing has long been difficult given the unknown identity of this beverage in the larger marketplace to consumers who are largely unfamiliar with the product. Recent research has shown that consumers are interested in hard cider and associate it as a complement to wine (Neill et al., 2024). By using consumer-oriented flavor language and co-marketing with wine, hard cider and southern apple production has the potential to return to its storied past with vigor. 

    Figure 1: Example of a Historical Southern Apple Variety that was Rediscovered and Being Produced in Commercial Orchards

    (Source: North Carolina Historic Sites, Horne Creek Farm, Southern Heritage Apple Orchard; Available online at: https://historicsites.nc.gov/all-sites/horne-creek-farm/southern-heritage-apple-orchard/learn-more/apple-variety-information/apple-index-q)

    Funding Statement: This work was supported by the USDA-NIFA AFRI under Grant #2020-68006-31682.

    References: 

    Flynt, Diane. 2023. Wild, Tamed, Lost, Revived: The Surprising Story of Apples in the South. UNC Press Books. 

    Neill, C. L., Lahne, J., Calvert, M., and Hamilton, L. (2024). Contextualizing hard ciderflavor language and market position. Journal of Wine Economics, 1–20. https://doi.org/10.1017/jwe.2024.13