WBC continues international beef effortsWritten by Saige Albert
Cody – In their April 29 meeting, the Wyoming Beef Council (WBC) looked at their fiscal year 2016 budget and marketing efforts for the next year. As part of that discussion, they received updates from Greg Haines of the U.S. Meat Export Federation (USMEF) on the impact of beef exports on the industry.
Haines explained that 96 percent of the world’s population of 7 billion resides outside the U.S., and the world’s population is expected to grow to 11 billion by the end of the century.
“If we look at growth of the population within the U.S, it is limited, even through the end of the century,” Haines said. “In another 10 to 15 years, 97 to 98 percent of the population will be outside the U.S. – which is where our consumers are.”
He added, “It is essential we are working out there and being aggressive with our marketing.”
At the same time as the population around the world is increasing, Haines noted that the number of consumers with the disposable income to purchase beef is growing.
“Beef is the premier protein on the world market,” he said, adding that U.S. beef grades above other protein products.
“Seven years ago, in 2009, the U.S., Europe and Asia Pacific were leaders in terms of middle class consumers that can afford our product,” Haines explained. “We had about 18 percent of the global share of the middle class.”
However, he noted that in 14 years, by 2030, North America will only have about six percent of the world’s middle class consumers, while Asia will hold 67 to 68 percent of those consumers.
“We’ve got a huge shift in purchasing power within the global economy,” he said. “With that shift, overall red meat consumption will also grow tremendously over the next few years.”
USMEF predicts that red meat consumption will increase by 10 percent over the next eight years, an amount equivalent to 36 billion pounds.
“To put that in perspective, total U.S. beef exports last year were about 2.4 billion pounds,” Haines commented. “There are huge opportunities for us.”
With global beef supplies remaining fairly flat, prices will increase as a result, he said.
As consumers increase and demand jumps, the value of beef will also continue to grow.
“From 2009, global trade was a little over $18 billion in value,” Haines said. “In 2014, that jumped to about $37 billion.”
While 2015 saw a decline, Haines also noted that the overall trend showed an increase.
“If we look at the overall trend, we are positive in terms of global demand and international marketability to buy more beef,” Haines said.
The largest markets by volume for U.S. beef include Mexico and Japan, followed by Korea, Canada, Vietnam, Greater China, the Middle East, Taiwan and central South America.
At the same time, Haines noted that USMEF is seeking to add as much value to beef as is possible.
“The biggest thing is we’re trying to add more value,” Haines said. “With beef, we look for cuts that fit into local styles or look at different price points to meet their ability to pay for those products.”
Less valuable cuts and offal from beef are highly sought around the world and often are nearly worthless in the U.S.
“There are a lot of cuts that we don’t really eat, but a lot of these markets want them – and they’ll pay a premium for them,” he added.
The additional value from beef through these additional products was $300 per head in 2014. While the number dropped to $278 in 2015, Haines noted that the overall trend is still positive.
USMEF is working to target Japan with its marketing efforts right now for several reasons.
“If we look at just three months ago, the exchange rate was 122 yen to the dollar,” Haines said. “Today, it is 109. That is a 12 percent decrease in the price of the product, which makes us much more competitive.”
He continued, “Japan is a big market and one of the biggest importers of beef in the world.”
The country has a population of nearly 130 million people and is only 40 percent self-sufficient in its ability to supply meat.
At the same time, Japan’s tourist market is expected to increase by 30 to 45 percent over the next five years, particularly with the upcoming Olympics.
“When people go to Japan as tourists, they want to eat Japanese food, and a lot of traditional Japanese dishes use beef,” he said. “This is a huge opportunity, as well.”
“At least 20 beef supplier are looking to get in and get market share in Japan because it is such a lucrative market,” Haines noted, adding that U.S. beef has a slight advantage because of the recognition by consumers and companies that U.S. beef is high quality.
Haines also added, however, that U.S. beef is more expensive compared to Australia, particularly with the Japan-Australia Economic Partnership Agreement (EPA).
The EPA went into effect in January 2015, and it dropped duties on chilled and frozen beef from Australia into Japan by six percent to 31.5 percent. That decreased an additional percentage point to 30.5 percent at the beginning of the fiscal year in April 2015, and it has continued to decrease.
“We’re paying 38.5 percent,” he said. “This disparity is why the Trans-Pacific Partnership is important. That agreement will level the playing field.”
USMEF aims to increase its beef marketing in Japan over the next year to capture some of the market share and capture profits for U.S. beef producers.
“We’d like to be able to work with Wyoming to target key retail chains, depending on their needs, and create individual, customized promotion plans that include education buyers and store managers,” Haines said.
WBC approved $20,000 from their fiscal year 2016 budget for USMEF marketing in Japan. The funding will be leveraged with support from other producer groups around the nation, and the WBC logo will be present on marketing materials.
Haines commented, “There are huge opportunities for us in Japan.”
The next meeting of the Wyoming Beef Council will be on June 8 in Casper beginning at 10 a.m.