Asian markets favorable in the future of U.S. beef

By Christy Hemken, WLR Assist. & Crop Editor

Denver – The production and marketing of U.S. beef for the global market took center stage at the recent International Livestock Congress-USA event held in conjunction with the National Western Stock Show in Denver.

When discussing U.S. beef exports to Asia, US Meat Export Federation (USMEF) Senior Vice President Joel Haggard said it’s important to realize the variables in addition to consumer characteristics that impact Asia’s beef imports.

“These are the trends that help to drive or to stifle U.S. beef imports, including politics, economic variables, domestic production, competition, market access conditions and the strategies of competitors,” he explained.

“We continue to face losses throughout the Asian region because we only have partial access for beef products in Korea and Japan. Before BSE, just under 60 percent of our exports went to those markets and we still aren’t running back on full cylinders there. If we were, our industry here would be much healthier,” he said. “Hopefully in 2008 we’ll get some breakthroughs on the access.”

He said it’s too bad that the U.S. is so limited on the Asian market, because right now is such a good time to be in the export markets. “The U.S. dollar is weak and our competition has supply constraints – with Australia in drought – and some competitors who have historically had low prices are having their prices creep up.”

“What we export to Asia are not steaks and hamburgers. We mainly export rib, chuck offal and by-products. Here they’re under-utilized, but over there they fit nicely into Asian cuisines,” explained Haggard. “The demand is for marbled, grain-fed young beef graded USDA Choice or higher. It’s good for our industry because Asian buyers will often pay hefty premiums over those offered by domestic buyers.”

“The Japanese are wealthy, and the wealthiest in the region, and their income distribution is fairly even so the majority can afford our products. They’re well educated, so they have a desire to know more about the food they consume and they’re tech-savvy and early-adopters,” he noted.

The concepts of “harmony,” “natural” and “healthy” are key lifestyle concepts to the Japanese, especially as the population ages, said Haggard. “Also, they’re very self- and family-protective, and on the food side this attitude may be traced to the fact that Japan imports over 60 percent of its caloric intake.”

However, he points out there’s a dichotomy at work. “On one hand there’s a demand for healthy, natural and organic products, but at the same time there’s a premium being placed on convenience and ready-to-eat food.” As more women enter the workforce, a demand has been created for convenient foods.

The Japanese consumers like to establish a relationship of trust with those that are producing a selling the food, which means there’s a keen interest in traceability. “Despite an interest in understanding the parameters of the food they eat, consumers will also tend to buy a product if the safely or quality has been endorsed by influencers,” said Haggard. According to surveys, these include the Japanese government, the U.S. government, celebrities, supermarkets and U.S. producers.

“Like Japan, Korea is a homogenous society and highly urbanized,” said Haggard. “The power of those controlling media has become very strong, an in this environment sensationalism is rife and often has nationalistic undertones.”

He said the implications for the USMEF are that in their approach to consumers they focus on beef safety. “It’s very important for the U.S. to counter with a loud voice and at the same time educate consumers on basic quality and safety issues.”

“Of all our MEF offices in Asia, it’s my opinion that our office in Seoul is the most watched and monitored by the Korean government and the Korean media and by other key influencers in terms of what we say and do,” commented Haggard.

“Chinese consumers are very diverse and are very large geographically and changing very rapidly as incomes grow,” he said. “They’re increasingly exposed to new products, both domestic and foreign.”

A big country, China still maintains different climates, cultures and incomes and a lot of minorities. “Because they weren’t even allowed to travel domestically until recently, the regional characteristics are still strong but are slowly dissipating,” explained Haggard. “The young generation is very willing to experience new things.”

On the cusp of developing a middle class, Haggard said despite what is seen on television about yachts and fine wines in China, the vast majority of citizens are still poor. “The average rural income for 800 million of the Chinese population is $500 to $600 per year.”

“But, there are still about 500 million urbanized residents and among this group we see a mass market we might be able to reach with our products,” he continued. “If you look at it on the urban basis, the first- second- and third-tiered cities are growing up to 20 percent each year in terms of economic output.”

“The Chinese are just starting to develop as tourists themselves, and one of the agreements reached between the U.S. and China was that the Chinese government would start allowing Chinese tourists to visit the U.S., which will expose the people to new ideas and new tastes,” he said.

Concluding his talk on the overview of Asian markets, Haggard said, “The signs are positive for U.S. exports to China, as capital incomes are growing and they’re improving the distributional infrastructure. However, we have a lot of access issues in China and there’s a lot of friction that extends down to our products.”