U.S. beef subject to scrutiny in global markets

Denver, Colo. – As exports continue to expand, the U.S. cattle industry is facing challenges in the global marketplace, according to JBS Vice President for International Sales Mark Gustafson.
    “We have to know the consumer and know the markets,” said Gustafson, who spoke at the 2012 International Livestock Congress in Denver, Colo. on Jan. 10. “We have to look at the markets as far as who is producing, who is consuming and who can pay for beef before we can establish where markets exist and where we have opportunities.”
    Gustafson also pointed out that most beef consumed in the world is eaten outside of the U.S., and per capita consumption is highest in those countries that are also the largest producers.
U.S. advantages
    “We have an advantage in that we produce the highest quality grain-fed beef in the world. We turn the grain abundance into high quality, marbled beef,” said Gustafson. “We don’t compete with grassfed, lower quality products, and we don’t compete with manufactured beef.”
    He continued that, by producing grain-fed cattle, the U.S. is able to achieve a more consistent product that is available at a competitive price, and the USDA grading system provides a consistent product quality.
    “Our product chain makes sure beef is available 365 days a year,” added Gustafson, recognizing that consistency is important for establishing foreign markets. “USDA grading is a big advantage for consistent product quality.”
    When Gustafson compared U.S. beef to producers of primarily grassfed beef, he noted that grassfed cattle are of all ages, and the quality is inconsistent, giving the U.S. a leg up in some international markets.
Customer requirements
    In exporting beef products, hitting the target market is important in order to sell beef products. Consumers are looking for smaller, more trim cuts, and packers must meet those demands, said Gustafson.
    This includes looking at how products are merchandised and sold, he added.
    “There are still wet markets – a lot of places where animals are slaughtered in the morning and eaten that night. There is no cold chain, and we have to be cognizant of that,” explained Gustafson.  
    “In the U.S., no one buys frozen beef, like in some foreign markets,” explained Gustafson. “We also have to look at whether a market has the cold chambers to handle chilled beef, for example.”
    “Different items in markets add value. Thin meats that we don’t see in the U.S. are in high demand in the foreign marketplace,” he continued, adding, “We have to look for alternative markets for offal items as well, so we look to Egypt and Russia.”
    In countries with protein shortages, offal items, such as liver, are of high value and provide the necessary protein.
    With the domestic consumer as the focus of many policy decisions, he added that the U.S. is at another disadvantage, saying, “We’re going up against other countries that have been in these trading arenas for many decades.”
    “One of the things that has really hampered the U.S. is that we don’t put a strong priority or emphasis on the export markets, so our systems and polices have moved away from international focus to domestic food safety,” said Gustafson.
    Ultimately, Gustafson added, “Customers can have all the want in the world to import high quality beef, but we run into restrictions that we have to deal with.”
Foreign markets
    The requirements for international trade are often extensive and can result in trade restrictions.
    “We have age requirements, offal designations, additives and procedures that we have to deal with,” said Gustafson. “They use them as trade barriers and to restrict trade.”
    “The market that holds the most potential is China,” added Gustafson, though he noted challenges that the U.S. must meet before establishing a viable export market.
    “There are 22 restrictions that we have to meet,” Gustafson explained, adding that while some are realistic, others are not. “The Chinese say that we have to be 100 percent traceable from farm to fork. We won’t get an agreement until we can negotiate something on traceability.”
    Competitors, such as Australia and South America, have a distinct advantage in that they have traceability systems already established, allowing them to enter those markets.
    Australia sees an advantage in their disease-free status, as well as the high numbers of cattle they are able to export.
    European markets provide other challenges, as well as opportunities.
    “Europe is becoming a net importer of quality beef,” Gustafson commented, “but one of the requirements to trade in Europe is a traceability system.”    
    Non-hormone treated cattle (NHTC) produced in the U.S. are currently sold in Europe because of the traceability inherent in that program, but overall exports are limited.
    Gustafson also noted that groundwork has been laid in European markets to begin testing on imported beef for beta-agonists such as Ractopamine.
    Taiwan and China have already banned beta-agonists, and Russia has begun taking steps to do the same, he said.
North American trade
    Closer to home, Gustafson marked the North America Free Trade Agreement as arguably one of the best agreements ever made, and trade relationships with Mexico and Canada are strong.
    “There are several products that are still not open in Mexico,” said Gustafson, adding that the political arena also affects trade in Mexico.
    In Canada, Gustafson said that we have a good trading partner who is competitive in the market. He also mentioned that currently the U.S. imports large quantities of Canadian beef.
    “There are many moving parts in international meat trade,” said Gustafson. “We are creating restrictions and opening opportunities, but the bottom line is we have the highest quality beef in the world. We have to learn to play to that from a policy and marketing standpoint.”
    Saige Albert is editor of the Wyoming Livestock Roundup and can be reached at saige@wylr.net.