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Mexico Drops U.S. Beef Restrictions

The U.S. Department of Agriculture (USDA) has announced that Mexico and Peru have lifted trade restrictions on imports of U.S. beef.

Mexico has traditionally been a top destination market for U.S. beef, with the country buying an average of 33% of all U.S. exports to supply the country’s hotels, restaurants, and supermarkets over the past 18 years. However, since a Canadian imported cow tested positive for Bovine spongiform encephalophathy, or mad cow disease in 2004, U.S. beef exports to Mexico have been in decline. This coupled with the modernization and expansion of the Mexican feedlot industry is threatening this trade and caused a reversal in the trend. Over the past 12 years, the volume of Mexican beef exports to the U.S. has grown significantly. In 2011, the U.S. imported 59,000 tons of Mexican beef, making Mexico the fourth largest supplier to the U.S.

Because Mexico opened beef trade with Canada before it relaxed its U.S. trade restrictions, despite the fact that the affected cow in question was of Canadian origin, many analysts believe that the long-standing trade restrictions against U.S. beef were a protectionist measure taken by the Mexican government on behalf of the country’s cattle industry. Although delayed, the lifting of restrictions is being taken as a positive sign of a return to normalization of trade between the two countries.

Overall, the conditions for the U.S. beef industry are positive. Low inventories and high global demand drove calf prices to record highs in 2014 – a trend that is expected to continue through 2015, and since 2008, cattle prices have consistently outpaced inflation. U.S. producers cannot afford to remain complacent though - Australia, Russia, and Argentina are all positioning to secure market share in the growing Asian export markets.

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