Central-South America Offers Opportunities for U.S. Beef, Pork

Everyone knows that Japan, South Korea and Mexico are going to be strong markets for U.S. pork and beef exports year in and year out. China has emerged as an eager buyer for American pork and the Middle East is hungry for our beef. But exporters looking for the newest emerging market are quickly learning that the Central/South America region is no flash in the pan.

That part of the world typically doesn’t make headlines for red meat imports, as most people think first of Brazil as a beef export powerhouse along with Uruguay, Argentina and Paraguay, while Brazil and Chile boast strong pork industries. But both U.S. beef and pork products are making headway in the southern hemisphere with reason for continued optimism.

“The U.S. has some built-in advantages over many of its competitors,” said Jessica Julca, USMEF’s representative for the region. “By virtue of its proximity and production practices, the U.S. is able to deliver quality and quantity in a timely fashion. This cannot be matched by most regional competitors, which creates opportunities to expand our market share.”

On the beef side, Argentina and Paraguay are two of the larger competitors in the region, and currently both have problems supplying the market – Argentina for its inconsistent export policies and Paraguay for limitations related to its FMD outbreak.

With the exception of Chile, pork continues to battle an image problem in South America, but Julca believes that extensive efforts by local pork producer associations are making headway in educating consumers about the quality, taste and health benefits of pork, which should help lead to increased per capita consumption.

Recently approved free trade agreements with both Colombia and Panama take effect this year, and should provide additional traction for U.S. exports to the region.

Pork exports surge
The region ranked seventh among export markets for U.S. pork in 2011, purchasing 72,023 metric tons (158.8 million pounds) of combined muscle cuts and variety meat valued at $186.6 million, increases of 21 percent in volume and 32 percent in value over 2010. Honduras was the largest single market, but Chile and Colombia showed the fastest growth.

After three months of 2012, pork exports to the region are up 9 percent in volume and 16 percent in value. Exports to Colombia soared 78 percent.

While retail sales of pork through supermarkets are relatively low in South America, Julca notes that the trend is to increase the number of retail stores in the region. She believes this will help boost pork consumption as consumers appreciate improved sanitary conditions at the point of sale versus traditional wet markets.

The largest consumers of American pork in the region are sausage plants, where U.S. product faces stiff competition from high-quality Chilean pork. Chile’s pork exports also benefit from credits that its processors provide to other South American buyers.

Beef exports also on upswing
Beef does not suffer from any image issues in Central and South America, and Julca says importers are excited at the prospect of providing high-quality grain-fed U.S. beef on a year-round basis.

The Central and South America region ranked 12th among global markets for U.S. beef in 2011, but it gained attention when it exploded with 53 percent growth in imports by volume and 81 percent by value – reaching 25,823 metric tons (56.9 million pounds) valued at $85.5 million.

Peru has been the top regional destination for American beef (10,922 metric tons in 2011), and those exports grew 97 percent versus 2010, although all but about 9 percent (991 metric tons) was offals (mainly tripe and liver).

Chile is an up-and-comer with 172 percent growth in imports by volume and 262 percent by value in 2011. It purchased 4,225 metric tons of U.S. beef last year, but the value hit $22.6 million – more than the value of the beef shipped to Peru. Chile is the leading market for beef muscle cuts in the region. Chuck roll was its major beef cut import, but now USMEF and U.S. exporters are working to increase the variety of products shipped from the United States.

“U.S. beef is just beginning to penetrate Chile’s HRI (hotel, restaurant and institutional) market,” said Julca. “A promotional campaign at supermarkets is helping enhance demand.”

The start of 2012 is showing added promise for beef export growth to the region. Through the first three months, total beef (muscle cuts plus variety meat) exports are up 44 percent in volume and 94 percent in value, with sales to Chile jumping more than eight-fold. A combination of factors, including improved access for U.S. beef and FMD issues in neighboring Paraguay have helped boost opportunities for American beef.

Colombia also offers potential for U.S. beef, which has found a niche market in the hotel/restaurant sector despite an 80 percent import duty. That duty will subside as the FTA takes effect.

“Continued development of the region as a trading partner can help diversify U.S. red meat exports and reduce dependence on any one country in the event of a market interruption,” said Julca. “There is much promise for exports to the region to grow, and it has potential to evolve into one of those difference-making markets.”

USMEF is planning four one-day pork training programs in June in Chile, Ecuador, Guatemala and Panama, and both beef and pork importers are invited to a two-day product showcase in Bogota in July where they will be matched with interested U.S. exporters.