Opinion by Irv PetschWritten by Irv Petsch
By Irv Petsch, Chairman, USMEF Beef and Allied Industries Committee and Chairman, USMEF Beef Steering Committee
The U.S. beef market is unique. When consumers go to a retail or food service outlet, they typically assume that the beef they are purchasing comes from somewhere close to home, or at least from somewhere in the United States. However, when a consumer in Tokyo goes shopping, she will find beef from 13 countries; in Hong Kong, the spectrum is even more diverse, with beef from 37 nations.
The ability to choose from a global marketplace of products gives consumers the opportunity to be selective while creating intense competition among the supplying nations. Argentina, Australia, Brazil, Canada, Mexico and a host of other beef-supplying countries go head-to-head with U.S. grain-fed beef in these markets, and each country has its own story to tell about their product’s characteristics including quality, safety and wholesomeness. In some cases, they tout additional attributes, ranging from traceability and sustainability to production without the use of antibiotics and growth hormones.
Whether its importers, chefs, retail personnel or consumers, there are many audiences that can benefit from learning more about the quality, value and safety of U.S. beef. Identifying the appropriate audience based on the level of sophistication and development of each market and then packaging the right message for that audience is a challenge that the U.S. Meat Export Federation (USMEF) has been mastering for more than 35 years.
The USMEF is the trade association responsible for developing international markets for the U.S. red meat industry. It is funded by USDA and the beef, pork, lamb, corn and soybean checkoff programs, and its members also represent nine other feeding, producing and processing industry sectors. Checkoff funds are a critical part of the funding mix that enables USMEF to represent U.S. red meat in the global marketplace. Beef checkoff dollars that are contributed to the USMEF are used solely for beef promotion in foreign markets and are matched with financial resources received from the USDA Market Access, Emerging Market and Foreign Market Development programs. USMEF further stretches the buying power of producers’ checkoff funds by combining them with third-party contributions from industry partners around the world (retailers, food service outlets, importers, etc.) to create an integrated, cost-effective approach to supporting beef exports.
Global population growth, rising incomes worldwide and the increased need for an affordable, accessible and nourishing food supply provide an astounding opportunity for U.S. beef producers to profit from demand for beef and beef variety meats. In fact, the opportunities are upon us. According to year-end statistics released by USDA and compiled by the USMEF, exports of U.S. beef set new records in 2011, reaching an all-time high in both volume and value. Beef exports finished the year at 1.287 million metric tons valued at $5.42 billion. This broke the 2003 volume record of 1.274 million metric tons and easily surpassed the 2010 value record of $4.08 billion. Export volume was 21 percent larger than in 2010, with value up 33 percent. While the record-breaking performance of 2011 is impressive, I believe that USMEF and its industry partners have laid the groundwork for even greater success in the future.
The beef export value per fed steer and heifer slaughtered was a record $206.37 in 2011, which was more than one-third higher than a year ago. Beef exports equated to 14 percent of total production when including both muscle cuts and variety meat. For muscle cuts only, exports totaled 11 percent of total production. In 2010, these ratios were 11.7 percent and nine percent, respectively.
Some of the increase in exports is due to the diversification of beef export destinations by USMEF. By building new markets and steadily reclaiming the market share lost in Asia due to BSE, beef exports approached the $5.5 billion mark in 2011 – that’s one-third higher than the 2010 record, and a very significant achievement for the U.S. beef industry. Hopefully, the boost in profitability resulting from the success in international markets will be a catalyst for ranchers to grow cattle numbers.
In December, beef exports exceeded year-ago totals by about six percent in volume (239 million pounds) and 17 percent in value ($476.2 million) – posting the highest monthly volume total since September and the highest value total since August.
Canada was the leading value market for U.S. beef in 2011, reaching $1.03 billion – a 41 percent increase over 2010. Volume to Canada was up 25 percent to 421 million pounds. Mexico was the volume pacesetter at 566 million pounds (up four percent from 2010), with export value totaling $985.3 million (up 20 percent).
Exports to Japan surged 27 percent in volume (349 million pounds) and 37 percent in value ($874.4 million), while exports to Korea grew by 37 percent in volume (339 million pounds) and about one-third in value ($686 million), as the U.S. took significant market share from Australia.
Programs such as “We Care” in Japan and “To Trust” in Korea have been very successful in rebuilding consumer confidence and positioning U.S. beef for success in these markets. Safety continues to be a significant concern for customers in both countries, but these programs are maneuvering us to a point at which we can focus more on the quality and enjoyment of the U.S. product. That is what made us the number one supplier in these markets prior to 2003, and through effective marketing it will be the driving factor that allows us to reclaim that position.
The newly ratified Korea-U.S. Free Trade Agreement offers excellent growth opportunities for both U.S. pork and beef, but U.S. exporters are especially anxious to gain relief from Korea’s 40 percent tariff on beef, which will be phased out over the next 15 years.
Other beef export highlights in 2011 include a record performance in the Middle East, where volume grew 30 percent to 386 million pounds and value was up 36 percent to $355.9 million. Russia also set new records for volume (160 million pounds, up 27 percent) and value ($255.9 million, up 68 percent), with a higher tariff rate quota for muscle cuts offering strong prospects for further growth in 2012. Last year’s quota was 91 million pounds, but Russia has increased it to 132 million pounds this year.
U.S. beef is still not eligible for export to China, but new records were set in Hong Kong of 111 million pounds (up 28 percent) valued at $237 million (up 50 percent) and Vietnam $192 million (up 17 percent, though volume of 98 million pounds trailed the 2009 record). Led by a strong performance in Peru and Guatemala and exceptional growth in Chile, beef exports to Central and South America grew to record levels of 56 million pounds (up 53 percent) valued at $85.5 million (up 83 percent). U.S. beef will also be gaining significant tariff relief in Panama and Colombia this year as a result of the aforementioned trade agreements.
Having served as Wyoming’s representative on the USMEF board of directors for the past six years, I find it extremely gratifying to see beef exports reaching new heights and I am happy to continue to be involved with the impressive staff at USMEF, and with my fellow beef producers who provide superior beef products and who, through the beef checkoff, have made solid investments in international markets.