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South Korea, home of Hanwoo and bulgogi, is now largest importer of Colorado beef

The trade war with China had little to do with South Korea’s rise but future trade could impact Colorado’s beef industry

At an E-Mart in Seoul, Korea, an employee offers samples of “Rocky Mountain Steaks.” This, however, doesn’t refer to the Rocky Mountains or Colorado, which in 2018 saw South Korea become the largest importer of Colorado beef. It was a “western-themed” promotion for U.S. beef, according to the U.S. Meat Export Federation. (Provided by the U.S. Meat Export Federation)
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Last year, the Republic of Korea became the top international buyer of Colorado beef. And no, its rise in the rankings did not have to do with the ongoing trade war between the U.S. and China.

The small East Asian country, known for its homegrown Hanwoo cattle and grilled sweet BBQ beef, knocked Japan and Canada out of the top spots of the state’s nearly $1 billion beef export industry. South Korea, which gobbled up about 30 percent of Colorado’s beef exports, has benefited from a free-trade agreement with the U.S. since 2012, when South Korea began phasing out tariffs on beef imports. Foreign trade deals and marketing support for Colorado food and agriculture has expanded the market for local farmers and producers.

“If we look at Colorado as a whole, we’re exporting four-times more food and agriculture products than we were 20 years ago,” said Tom Lipetzky, director of marketing programs for the Colorado Department of Agriculture. “… And beef makes up half of the (food and agricultural) exports from Colorado.”

It’s not just Colorado beef. U.S. beef exports to South Korea have been on the rise for years because of the Korea-U.S. Free Trade Agreement, which has cut tariffs in half to make American beef more affordable than South Korea’s nearer neighbor of Australia. America’s beef exports to South Korea grew 47 percent to $1.44 billion during the first 10 months of 2018 over 2017, according to the U.S. Meat Export Federation. (More recent figures aren’t available because the federal shutdown closed the data offices of the U.S. Dept. of Agriculture.) Comparably, U.S. beef exports to all countries grew 17 percent.

Beef and the Korea-U.S. Free Trade Agreement

Duties on U.S. beef have been reduced 2.7 percent a year as part of the trade agreement with South Korea. They phase out completely by 2026.

2011: 40%
2012: 37.3%
2019: 18.7%
2026: 0%

Source: U.S. Meat Export Federation

But Colorado has seen faster growth in exports to South Korea, and that’s not just because of lower tariffs. Food-safety developments at Colorado State University and a beef industry hub here are credited with giving the state a higher profile. There’s also local growth by some of largest beef packagers, including Greeley-based JBS and Minnesota’s Cargill. Cargill’s Fort Morgan facility counts South Korea among its top three export markets, according to a company spokesman. Colorado’s beef shipments to South Korea grew 60 percent last year, according to state data.

“There’s not one single thing but there are a lot of things Colorado producers do really well,” said Keith Belk, a Colorado State University professor of Meat Safety and Quality who helped the U.S. fix trade with Japan after the cattle-disease outbreaks in the U.S. in the 2000s. “On average, beef grown in Colorado is fed a high (corn-based) concentrate diet, the animals are younger, and as a consequence, that makes beef produced in Colorado of a higher quality and provides confidence that we’re meeting requirements. … The Koreans would have a lot of confidence in products shipped from Colorado.”

Concerns, however, are mounting about the future of beef in Colorado, from the ongoing drought to the impact of the U.S. leaving the Trans-Pacific Partnership in 2017. A new trade deal among remaining members just went into effect that makes it more beneficial for Japan — America’s leading buyer of beef — to trade with Australia.

“We have a tremendous disadvantage,” said Erin Borror, an economist at the Denver-based U.S. Meat Export Federation. “It will take market share from the U.S. and the growth potential in Japan will go to our (foreign) competitors.”

Colorado’s beef reputation

The state may not have the most cattle — that would be Texas. But many in the industry call Colorado home. National Livestock Producers Association is in Colorado Springs. IMI Global, the company offering beef verification and certification, is in Castle Rock. Five Rivers Cattle, the world’s largest cattle feeder, is in Johnstown. National Cattlemen’s Beef Association and the Cattlemen’s Beef Board — which funded the “Beef. It’s what’s for dinner” campaign in the 1990s — are in Centennial.

But it could be CSU in Fort Collins and its expertise in animal science and food safety that cemented Colorado as a beef ecosystem.

“Some of this goes back more than a decade ago when the U.S. was trying to reestablish the market after mad cow disease,” said Lipetzky, with the state agriculture department. “Scientists and researchers were brought to Colorado so they could work with CSU to demonstrate the production process for food safety.”

Remember bovine spongiform encephalopathy, a.k.a. mad cow disease? That devastated the U.S. beef industry for more than a decade. Countries stopped buying from U.S. ranchers. China only started buying U.S. beef again in 2017, after a 13-year hiatus.

During the outbreak, CSU professors were tapped to help the U.S. government revive beef exports to Japan and other countries, said Belk, now CSU’s Monfort Endowed Chair in meat science in 2015. He and Gary Smith worked with Japanese scientists to find a solution. The standard regulation was to keep cattle older than 30 months out of the human food chain since cattle were unlikely to be infected with BSE if they were under 4 years old.

“So where we can market cattle as young beef in the U.S. at 30 months, the Japanese didn’t like that,” Belk said. “They wanted to draw the line at 22 months.”

Ultimately, the team didn’t need to change any U.S. laws, Belk said. Instead, they created a program allowing cattle producers to go a step further to meet Japan’s 22-month requirement. CSU helped food inspectors verify the age of young cattle. And Japan became the top buyer of U.S. and Colorado beef.

“That was expensive, but it became a palatable compromise,” Belk said.

Cheek meet and more

The beef industry’s growth also has a lot to do with marketing. By tapping overseas markets, cattle ranchers can sell some of the less popular parts for a higher price, said Hugh Sanburg, a cattle rancher in Eckhert.

“Part of what happens with the export market is it helps us better utilize the whole carcass,” Sanburg said. “We send product that we would not consume here in the U.S.”

Like beef lips, also known as cheek meat, he said.  

“When you’re looking at something like beef lips, they’re marketed to Mexico and go into tacos,” he said. “Those prices could be as high as $2 a pound. Last I know, it’s $1.60. In the United States, it would go into rendering (and sell) at 5 to 6 cents. We market a ton to Japan and trying to do more with Mexico and South America.”

A push by the U.S. beef industry to expand the Korean palate — and get Koreans to buy thicker cuts of meat — has helped the U.S. become one of the top suppliers of beef to the Asian country. This photo was taken at a grocery store in Seoul, Korea in March 2018. (Provided by U.S. Meat Export Federation)

South Koreans are eating more beef per capita, and while local beef, the marbled Hanwoo, is highly prized, it’s also more expensive. That’s created South Korean appetite for U.S. beef products, said Borror, with the Meat Export Federation. U.S. chilled beef — or meat that’s never been frozen and is sold in supermarkets or restaurants — grew 19 percent and accounted for 58 percent of South Korea’s imports.

“Korean consumers have shifted their diets toward protein and less starch and rice. It’s a combination of economic growth and (Korean) consumer confidence in U.S. beef,” Borror said. “They imported more from Australia than the U.S. but it’s also a consumption story because we still grew.”

She also credits U.S. marketers who promoted thicker cuts of meat to South Korea, which is famous for its thinly-sliced beef sirloin in dishes like bulgogi.

“One of our big initiatives was to show how convenient it is to cook U.S. beef. You can use thicker cuts and still have a very simple cooking method,” Borror said. “I can see the change at the meat case in Korea, there are more steak-like cuts. Even if you cut out a chuck roll, it’s a whole sea change of selling (U.S.) products.”

Climate change, drought and the future of beef

For ranchers, a bigger concern is drought. Without enough rain, it’s difficult to grow enough food to feed cattle in the winter, said Sanburg, who has “about 300 to 350 mother cows” on his ranch in Eckert.

“We cut back our herd by one fifth and didn’t retain as many heifers. A number of producers south of us had to sell off their whole herd because they had no winter feed,” he said. “We’re getting moisture now, and that’s a good thing. But as dry as conditions were last year, it will take significant precipitation to build up soil moisture.”

The ongoing trade war also hasn’t skipped Colorado beef entirely.  

While Colorado’s beef sales to China grew by more than 2,000 percent last year, China was a mere quarter of a percent of all Colorado beef exports. South Korea’s share was 29.4 percent.

But that is only edible beef.

China is the state’s largest buyer of hides and skins. Because of the tit-for-tat tariffs, China’s imports of such U.S. products declined 41.9 percent as of October, compared to the same 10-month period in 2017. Lipetzky, with the state agriculture department, attributed the decline to the trade war and to Australia’s oversupply, which gave other countries an alternative.

There’s also concern with Colorado’s future with Japan, which dropped to number two last year of top importers of Colorado beef. The renegotiated Trans-Pacific Partnership between 11 remaining members, including Australia and Japan, went into effect Dec. 30. It has Japan decreasing tariffs on beef to 9 percent over the next 15 years for members. For everyone else, including the U.S., Japan’s tariff on chilled beef remains at 38.5 percent.

“There will be tariff disadvantages with the major market of Japan, and that could potentially be large. We may lose market share,” said Sanburg, who also serves on the Cattlemen’s Beef Promotion and Research Board. “But quality wise, they (foreign markets) enjoy our high quality, corn-fed beef.”


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