Montana has scored a $200 million dollar deal to sell its beef on the Chinese market, one that will come with an up-to-$100 million investment in a processing plant In its state.
The deal between JD.com, one of China’s largest retailers, and the Montana Stockgrowers Association was announced Wednesday — even as the Donald Trump administration is in Beijing negotiating a separate deal it said is worth as much as $9 billion.
Under the memorandum of understanding, JD.com has agreed to purchase a minimum of $200 million of Montana-sourced beef over a three-year period from Montana Stockgrowers Association members. The retailer will also invest up to $100 million in a processing plant in Montana to support the beef production.
The latter was key to securing the agreement, Chinese officials told Montana ag producers during a meeting in Montana in September arranged by Sen. Steve Daines.
Construction for the processing plant could begin as early as 2018, though the announcement by Daines’ office didn’t mention a location. It also didn’t specify whether it would be a new plant, or remodeling an existing location. Billings used to have a large packing plant at one time.
The beef deal is separate from a $9 billion package that U.S. Commerce Secretary Wilbur Ross announced Wednesday, but is part of an overall $1.2 billion deal that included pork from Smithfield Foods, Inc.
In previous negotiations, China agreed to import a minimum of $2 billion of U.S. food goods during the same three-year period that is covered by JD’s agreement. The beef and pork deal will count toward satisfying that.
Daines has been a key player in the effort to secure the trade deal for Montana Stockgrowers. Earlier in the year, the senator hand-carried beef from Miles City rancher Fred Wacker’s operation to Chinese officials, as a United States delegation urged China to open its markets to U.S. beef and other goods. Not long after that visit, China did agree to lift its 13-year ban on American beef, and, more importantly, took concrete steps to make it so.
Soon after, Daines arranged a roundtable with Chinese officials and Montana ag producers, to discuss trade opportunities. That group included Chinese Ambassador Cui Tiankai, as well as a number of Chinese business representatives.
Wacker, the owner/operator of Cross Four Ranch, had already been exporting antibiotic- and implant-free Montana-sourced beef to China through Tyson foods. He was among Montana cattle producers at the meeting and recalls being told by Tiankai that the key to getting a deal would be acquiring Chinese investors.
It is not the first time Montana has made a deal of similar nature. Japan, for example, owns several grain elevators in the state, so that it can ensure it buys only quality U.S. wheat. Beijing-based Goldwind, meanwhile, built a 14-turbine wind farm near Shawmut in 2012 that supplies power to NorthWestern Energy.
Wacker was among delegates in Beijing Wednesday for the signing ceremonies.
“China’s market has the potential to be a game-changer for Cross Four Ranch and Montana ranchers more broadly,” he said. “The memorandum of agreement shows how much interest there is in China for high quality cattle and beef from Montana and the U.S., and I appreciate Sen. Steve Daines’ efforts to help connect me with potential Chinese buyers.”
Errol Rice, executive vice president of the Montana Stockgrowers Association, was also present at the ceremony.
“While there’s a lot of work that needs to be done, this memorandum of agreement represents a great step in the right direction for selling more U.S. beef in China and developing productive relationships between Montana ranchers and Chinese consumers,” he said.
North Dakota beef interests and lawmakers hailed their neighbors’ success, and said they hoped it would help further open the door to the Chinese market for agricultural products.
Julie Ellingson, vice president of the North Dakota Stockgrowers Association, said it is an exciting development, and one she believes shows the future potential for U.S. beef in China.
Sen. John Hoeven was similarly pleased with the development.
“Opening Chinese markets to American beef has been part of our ongoing efforts to expand agriculture exports and ensure fair treatment for our farmers and ranchers,” he said. “We specifically pushed the administration to reach a deal with China earlier this year to lift restrictions on our nation’s beef products. Exports like these help ensure stronger prices for our agriculture producers and give greater access to high-quality American products to consumers around the globe.”
China is one of the world’s largest markets for beef, with more than 258 million consumers and a rapidly growing middle class. JD.com plans to sell its Montana-sourced beef via an e-commerce platform.
The deal will increase Montana’s beef export sales by as much as 40 percent in 2018, Daines said.
“This landmark agreement has the potential to substantially increase Montana opportunity and agricultural exports to the fastest growing overseas market for beef,” the Senator added. “This is a win for Montana’s hardworking ranchers.”