by Kevin Kester, Chairman
At the May 21 meeting of the USMEF Beef and Allied Industries Committee, we discussed challenges facing the U.S. red meat industry in key export markets, strategic plans for meeting those challenges and a number of unique and customized approaches to increase the value of U.S. beef exports around the world.
Among the goals for the U.S. industry as a whole: Get more aggressive in Asia – especially Japan and South Korea – as Australia potentially faces a decline in its beef supply; continue to build demand in leading volume market Mexico; maintain work in the smaller markets with growth potential; and be prepared to compete in China if and when the market reopens to U.S. beef.
Mark Gustafson, chair of the USMEF Exporter Committee, touched upon specific market access issues, problems caused by the rising U.S. dollar and strong competition among countries that export beef. He presented the beef committee with a status update on the China market, which presents great potential for U.S. beef — if the industry can gain access to it. Gustafson noted that traceability continues to be a major stumbling block to reopening the China market. He said that a collective effort by all levels of the industry – from producers to packers – is needed to establish a system to meet requirements set by the Chinese government.
On a positive note, Gustafson said that there appears to be steady progress with Saudi Arabia, which closed to U.S. beef following the 2012 BSE case in California. A recent meeting with Saudi officials that included USMEF staff was encouraging, and a positive outcome could be around the corner. He also addressed trade with Egypt, a critical market for U.S. beef variety meat. Egypt alone accounted for 78 percent of last year’s U.S. liver exports but has adopted a new standard for use of hormonal growth promotants (HGPs) that is of great concern to the U.S. industry. In an effort to keep the market on course, USMEF met with Egyptian government officials to educate them on the science surrounding HGPs and the international standard-setting process. The goal is to lead the country’s regulatory officials to develop science-based standards that will ease concerns about maintaining access to the market.
Dave Edmiston, chair of the Texas Beef Council, gave the committee a perspective from Texas producers, many who struggled through a drought that began in 2011. There was a lot of downsizing during the drought, Edmiston explained, but the Texas Beef Council has remained a force in the industry investing $1.1 million in building demand for U.S. beef in markets across the world. Texas continues to have a great relationship with USMEF, Edmiston said, pointing to promotions of the Texas barbecue concept at food shows, seminars and tasting events in Japan and a project that brought Hong Kong buyer teams to Texas.
A number of USMEF staff members from key markets reported to the committee, providing a “boots on the ground” perspective of challenges and opportunities for U.S. beef.
Access to China still eludes the U.S. beef industry, even as most other principal beef-producing countries have signed access protocols and are growing their exports to China. Australia, Uruguay and New Zealand are currently China’s leading suppliers. Domestic production is small and has not kept pace with growing demand.
Most beef consumption in China is grass-fed lean beef for traditional dishes. Grain-fed beef demand is increasing rapidly, led by the proliferation of hot pot and Korean barbecue chain restaurants and western steak outlets.
USMEF staff also noted that live cattle exports to China have gained momentum. Australia exported 117,000 head of dairy cattle in 2014, and the two countries are reportedly working on live cattle export protocols.
Meanwhile, Korea is a growing customer for U.S. beef, as consumer confidence in U.S. food safety grows. The percentage of consumers who believe U.S. beef is safe rose from just 5.3 percent in 2010 to 44.7 percent last year.
As part of its strategy to increase the export of chilled beef to Korea through expanded coordination with retailers, USMEF continues to introduce U.S. chilled and value-added beef items in top Korean retail and foodservice chains, contributing to a 12 percent increase in export volume in 2014. In January, retail giant E-mart launched the new store brand “Rocky Mountain Steak” using U.S. beef, and sales have already surpassed $1 million.
USMEF strategies for Mexico include emphasizing the origin of U.S. beef – which is a strong selling point in Mexico — educating chefs and consumers about the quality of U.S. beef and promoting USDA Choice beef at retail outlets.
The major challenges in Mexico are high U.S. prices and tight supply resulting from lower U.S. production. Demand has held up well, but larger supplies of pork and poultry make the protein market increasingly competitive in Mexico.
USMEF staff also summarized efforts to promote underutilized U.S. beef cuts on a global scale and detailed a cut promotion training workshop held at the Iowa State University Meats Laboratory attended by buyers from Japan, Korea, Taiwan, Hong Kong, the Philippines and Vietnam.
And finally, as chairman of the committee, I offered a resolution that encourages those organizations that support expanded trade with Cuba to advocate for the statutory and regulatory changes necessary to allow USDA program funding and checkoff funding to be used for market research and market development activities in Cuba. After adding an amendment to ensure that no funds are used prematurely, the resolution was unanimously approved by the committee and adopted the following day by the USMEF Board of Directors.
With the reestablishment of diplomatic relations with Cuba, U.S. agricultural sectors are hopeful that new export opportunities will emerge. While Cuba is currently open to U.S. red meat, exports have declined over the past few years. The objective of the resolution is not to facilitate large investments of USDA or checkoff funding in Cuba in the near term, but rather to accommodate the basic market research necessary to evaluate the market and allow USMEF to assist companies interested in exporting to Cuba.
If you have questions regarding the Beef and Allied Industries Committee meeting, please contact staff liaison Greg Hanes at email@example.com or call 303-623-6328.