R-CALF USA International Trade Committee Chair Doug Zalesky testified before the ITC regarding the potential economic impacts to U.S. cattle producers by the proposed Colombia Trade Promotion Agreement (TPA). Colombia has 25 million head of cattle and growing beef production capabilities, and is also a net exporter of beef.

“R-CALF obviously is concerned that this TPA would do little to promote exports of U.S. beef, yet subject domestic cattle producers to substantial risks of increased beef imports,” Zalesky said. “The excess beef production there could result in a dramatic rise in exports of Colombian beef to the United States. Colombia’s excess domestic supply and low per capita income will limit any opportunities for U.S. beef exports to that country.

“Additionally, lax rules of origin may result in large volumes of cattle being sent from other countries in Latin America through Colombia for processing and export to the U.S.,” Zalesky continued. “The MERCOSUR nations alone have a combined herd size of more than 250 million head, and Venezuela has another 16 million head.

“Also of significant concern to R-CALF is although this TPA includes a quantity safeguard on imports of fresh, chilled and frozen beef from Colombia, this safeguard phases out when the quota on imports of such beef expires in Year 10 of the agreement,” Zalesky explained. “Thus, there is no safeguard designed to insulate U.S. cattle producers from abrupt price fluctuations due to imports after the quota expires, increasing the risk that liberalized trade under this agreement would result in volumes of low-priced imports, causing a drop in cattle prices here.

“When this agreement comes up for a vote, R-CALF urges Congress to keep in mind that market dynamics – the high concentration of meat packers and their reliance on non-traditional contracting practices, along with the perishable and cyclical nature of cattle and beef – need to be taken into account,” Zalesky emphasized. “These market factors increase the leverage of packers and processors, facilitating their ability to use beef imports to drive down the prices paid to U.S. cattle producers. Because of the limited marketing window of live cattle, producers are particularly susceptible to these types of market manipulations.

“Increased openness to imports of Colombian beef is likely to have a significant adverse effect on U.S. cattle producers,” he concluded.

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