Market access key to global meat markets

Denver, Colo. – When stepping back to take a look at the global meat market, Erin Daley of the U.S. Meat Export Federation (USMEF) says Brazil is down 15 percent in beef exports, while Argentina is up 55 percent.
She says Brazil has decreased in exports to its main market, Europe, because of their small number of licensed farms, which are required by that region. “Brazil has been surprisingly slow in response to Europe’s demand,” she notes.
“Argentina has had a massive increase in slaughter and low prices, which has made a huge increase in their exports – a lot of which go to Russia – but that’s not enough to offset the drop in exports from Brazil,” says Daley of the world market.
She notes Russia has undergone a big change, and was a “huge driver” in 2008 before the economic crash, importing meat in “unprecedented volumes.” In addition to Russia backing off in 2009, Daley says consumers in Mexico also backed off, trading down.
However, the growth side of the market is China and its region, including Hong Kong, Vietnam and Macau. In that region Daley says South American exports dominate, followed by India with cheap buffalo beef. Following those are the U.S., Australia and Canada. Although the U.S. has more export potential, China remains closed to its beef.
“There are ways of getting beef into the region right now, but it’s a huge growth market and we can’t overlook it going forward,” says Daley.
“World meat trade flows have been heavily shaped by market access, with South America not having access to high value Asian markets and the U.S. not having access to those Asian markets for fresh product,” she continues.
“Australia, New Zealand and Uruguay export over 60 percent of their meat production, and they also produce to meet the specifications and demands of the international marketplace,” says Daley.
Of the U.S., she says, “We supply 90 percent of our production to our domestic market. We’re by far the largest beef market and the highest per capita consumption.”
She says Japan, Korea and Russia rely heavily on imports, and that’s a trend that will continue as their domestic production isn’t efficient and on such a small scale it’s easier for them to import specific cuts from overseas.
Regarding the 2009 pork situation, Daley says the U.S. is the largest exporter of pork in the world, followed by Europe, Canada and Brazil. The “swine flu” scare caused a drop in all those markets except Brazil, which grew in 2008 driven by China and Russia.
“China consumes 50 percent of global pork,” says Daley. “They’re a growth market, but a wild card in what they’ll produce domestically.”
The U.S. meat export trend moving forward is generally positive, notes Daley. “Beef has not been able to regain its pace where we were exporting on a value basis more than pork or poultry pre-BSE,” she says. “That shows the impact of market access, especially in Japan and Korea, which were top markets on a value basis prior to BSE.”
Japan and Korea are major markets still not recovered to 2003 export volumes. “On a value basis, we’re at 94 percent of pre-BSE,” says Daley.
She says a few things that will help the U.S. are currencies, market access and consumer perspectives.
“We need to educate consumers on the production scheme in the U.S., and introduce them to the American cowboy. They need more familiarity with where their food comes from,” she explains. “The consumers, when they’re importing 50 to 60 percent of consumption, want to know where the meat comes from. We want to build more confidence in U.S. beef.”
Besides China’s growth potential, which is nearing the size of Canada on a volume basis, Daley says that while Japan limits imports to cattle less than 21 months of age there’s a billion dollars in potential left on the table.
On currencies, Daley says the Japanese yen has been strong. “Which has been frustrating with access for only under 21-month cattle because it was the one with the currency advantage the entire time,” she adds.
“Global beef consumption is expected to grow, by huge numbers especially toward 2050,” notes Daley. “It’s expected to grow by roughly the size of Europe’s current meat production by 2018. Hopefully we do have a little appetite for exports, because that’s where growth will occur.”
“Beef production has been stagnant, with the only growth expected in Brazil. We have tight global supplies, especially if we get into an expansionary phase and hold back heifers,” states Daley. “First we’ll need to see higher prices to have the incentive to expand.”
On another positive note for beef, Daley adds that poultry consumption has fallen after years of steady increase. “The U.S. poultry market is saturated, though a small rebound is expected in 2010,” she notes. “Poultry’s ability to quickly respond, as the most efficient protein, will be in their favor.”
Christy Hemken is managing editor of the Wyoming Livestock Roundup and can be reached at christy@wylr.net.