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Global Growth Committee Reviews Beef Export Priorities

Joel Haggard, USMEF senior vice president for the Asia Pacific region, told the Global Growth Committee that e-commerce is becoming a popular way for Asian consumers to purchase meat products

Joel Haggard, USMEF senior vice president for the Asia Pacific region, told the Global Growth Committee that e-commerce is becoming a popular way for Asian consumers to purchase meat products

The beef industry’s Global Growth Committee received an update last week on the progress U.S. beef exports have made in several international markets, the significant obstacles that remain in others, and on future strategic priorities. The committee, formed by the Cattlemen’s Beef Board (CBB) and the Federation of State Beef Councils to develop strategies for checkoff-funded programs to promote U.S. beef across the globe, met in Denver as part of the 2015 Cattle Industry Summer Conference.

The committee heard from U.S. Meat Export Federation (USMEF) President and CEO Philip Seng, who detailed the challenges presented by existing tariffs and trade barriers, the potential benefits of the Trans-Pacific Partnership (TPP) and the pressing importance of regaining market access to China. Seng also provided insight into the South Korean market, which is becoming increasingly competitive due to numerous free trade agreements with beef supplying countries. He also noted that just three years ago, the now-closed Russian market was a $300 million destination for U.S. beef.

“The U.S. industry has been locked out of Russia due to ractopamine restrictions since early 2013, and now we face additional obstacles,” Seng explained. “Most beef products from the U.S. fall under an import embargo imposed by Russia in August of last year, which has now been extended through June 2016. In addition, Russia’s buying power has plummeted. As a result, its imports from most suppliers are down.”

Dan Halstrom, USMEF senior vice president for marketing, details USMEF efforts in emerging markets

Dan Halstrom, USMEF senior vice president for marketing, details USMEF efforts in emerging markets

Seng pointed to some positives in the Middle East – the United Arab Emirates (UAE) and Kuwait are showing great potential – but also noted that Saudi Arabia, once a $30 million market for U.S. beef, has had a BSE-related ban on U.S. beef in place for more than three years. USMEF has also placed a high priority on ensuring continued access to Egypt, which is a critical destination for U.S. livers and other beef variety meat items.

In Korea, U.S. beef maintains a tariff rate advantage but the gap has narrowed. The U.S. currently holds a 5.3 percentage point advantage over Australia, and an 8-point advantage over Canada. Duties on U.S. beef will be phased to zero by 2026, and shortly thereafter on Australian (2028) and Canadian (2029) beef.

Seng did not mince words when it came to China, which today imports well over $100 million of beef each month. In 2011, it imported just $112 million of beef for the entire year. That kind of growth is something the U.S. beef industry can’t ignore.

“If the U.S. beef industry is going to sustain its recent export growth, access to China is of paramount importance,” Seng told the committee. “While we remain out of the market, Australia, Uruguay, New Zealand, Canada and Argentina are all gaining a strong foothold. Lack of access to China also affects prices commanded in other markets, as China exerts more and more influence on the global beef market.”

Seng’s analysis followed an update on 2015 export results from USMEF Chair Leann Saunders, who said that even in times of very tight revenues, the CBB and state beef councils “have shown an outstanding commitment to expanding global markets.”

Idaho cattleman Morgan Evans (far right), co-chair of the Global Growth Committee, explains the AR tactic scoring system

Idaho cattleman Morgan Evans (far right), co-chair of the Global Growth Committee, explains the AR tactic scoring system

As a result of that support, Saunders cited some of the smaller markets that continue to show promise for serious growth, including Vietnam, Singapore and the Philippines, each of which have been performing well due to increased marketing efforts.

Dan Halstrom, USMEF senior vice president for marketing, Greg Hanes, assistant vice president for international marketing and programs, and Joel Haggard, USMEF senior vice president for the Asia Pacific region, provided a report on current marketing activities, future promotional plans and export results in individual markets. The committee was given an in-depth look at the Japanese market, where imports of U.S. beef grew substantially between 2009 and 2014. The U.S. has been closing in on its biggest competitor in the market, Australia, but the Japan-Australia Economic Partnership Agreement implemented earlier this year has eased duty rates for Australia to 31.5 percent for Australian chilled beef and 28.5 percent for frozen beef. The U.S. duty rate continues to be 38.5 percent.

At the same time, projections over the next decade show that beef consumption in Japan is still growing. USMEF continues to improve the image of U.S. beef in Japan, partnering with food companies and product brands and launching new promotions such as the successful “Think Beef, Think American” campaign.

Examples of ongoing promotional efforts in other markets include:

  • In Mexico, USMEF is targeting leading national and regional supermarkets to identify and promote U.S. beef. There is also an effort underway to educate chefs in order to increase their knowledge of U.S. beef.
  • In Korea, efforts include a “branded beef expansion” featuring in-store branding, cooking classes and celebrity endorsements. There’s also a strong effort to promote U.S. beef on social media because food bloggers are very influential with consumers.
  • Middle East strategies includes chef training on proper cooking and safety of U.S. products and education on affordable, underutilized cuts.
  • In countries bordering Russia, USMEF is working with retailers to help modernize meat displays, which will allow for better differentiation of quality products.

Haggard reiterated Seng’s point about the vital need to regain market access to China. He also discussed the growing trend toward e-commerce in several Asian countries where consumers are becoming more willing to order meat online.

Hanes provided a look at the committee’s priorities, which are to increase access to export markets while addressing production technology challenges, leverage the brand equity of the U.S. beef industry to promote U.S. beef in foreign markets and educate beef cattle producers on the significance of the beef export market.

Committee members utilized this information to complete beef checkoff authorization request (AR) tactic scorecards, indicating the degree to which they felt each individual tactic managed by USMEF supports the goals of the Beef Industry Long Range Plan.

The committee reconvened the following day to continue its discussion of the AR tactic scoring system and address any remaining questions about USMEF market development and market access activities.

As in past meetings, committee members also sampled dishes made with U.S. beef that are popular in international markets. The dishes chosen for this meeting were examples of the types of food being served in China and included one selection from three different types of Chinese fare:

  • Grilled beef skewer (Chinese street food) made with marinated and thinly sliced U.S. beef round.
  • Beef stir-fry with rice (Chinese comfort food) made with thinly sliced U.S. chuck roll.
  • Peppered beef with noodles (Chinese high-end restaurant food) made with U.S. ribeye.

“We wanted to give a small sampling to demonstrate the range of use for beef in the China market and the potential for beef cuts if the market is opened to the U.S.,” explained Hanes.

On a related note, the Beef Checkoff Program has announced a transition of its committee structure, which will still include a committee focused on export growth. For more details, see the joint news release from CBB and the Federation of State Beef Councils.