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USMEF Beef and Allied Industries Committee Report

by Kevin Kester, Chairman

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At the Nov. 6 meeting of the USMEF Beef and Allied Industries Committee, we discussed strategic plans in key export markets, focusing on USMEF’s customized approach applied to diverse markets around the world.

One example is in Japan, where there is strong growth in the family-friendly restaurant sector. In response to this trend, USMEF promotes U.S. steaks at a cowboy-themed restaurant chain operated by Royal Host, one of Japan’s leading foodservice companies. This has resulted in tremendous sales growth, displacing Japanese and Australian beef.

Royal Host President Seiji Yazaki addressed the committee, discussing the company’s culture and its focus on providing the highest quality products to its customers. He stressed Royal Host’s hands-on approach, which led Yazaki and several company executives to visit the United States, as well as potential competitors, before making the decision to serve U.S. beef. He noted that as a result of that decision, sales have tripled since 2011.

In Mexico, USMEF’s objectives revolve around proper handling, labeling and merchandising of U.S. beef in large national retail chains as well as smaller regional outlets. Despite higher beef prices globally, U.S. exports to Mexico have increased 19 percent through September. This is due in part to lower domestic production in Mexico, but also reflects very strong demand. The committee received a report on a new USMEF initiative in Mexico that shows great promise, centering on promotion of USDA Choice beef to higher-income consumers.

Demand continues to grow in Hong Kong, where full access for U.S. beef was achieved earlier this year. With a strong fourth quarter, Hong Kong could be a $1 billion market for U.S. beef in 2014. Lack of access to mainland China, however, continues to be a major frustration for the U.S. industry.

As global market dynamics evolve, beef promotion resources are sometimes shifted to maximize effectiveness. For example, with the Russian market closed, USMEF has focused resources on other countries in the Greater Russia region – such as Georgia, Azerbaijan, Armenia, and Uzbekistan – that hold new opportunities for U.S. beef. USMEF is still conducting basic trade servicing and account maintenance in Russia, but other activities have been moved elsewhere in the region.

Dave Bruntz of the Nebraska Corn Board provided an interesting report on a U.S. producer delegation that visited Japan and China earlier this year. More details on these activities were reported in the Sept. 12 and Sept. 19 editions of the Export Newsline.

In a global beef trade overview, the committee learned beef supplies are projected to be down 1 percent in 2015, as growth from Brazil, the EU and India will not offset smaller production in the U.S., Australia and China. USMEF continues to address buyer concerns about surging prices by using specialized tactics to further penetrate targeted markets. Results are encouraging, as U.S. exports through September are up 3 percent year-over-year in volume despite lower supplies. Export value is up 15 percent to $5.2 billion – easily a record pace.

The committee also received an interesting competitor’s perspective from Paul Finnerty, CEO of ABP Food Group in Ireland. ABP is one Europe’s largest beef processors, with 1 million cattle slaughtered per year, $3.5 billion in annual sales, and 8,500 employees working at 36 processing facilities. Looking to expand its business beyond Europe, ABP recently opened new sales offices in Asia and the United States.

If you have questions about this meeting or would like to provide input to the Beef and Allied Industries Committee, please email Greg Hanes or call 303-623-6328.