by Cevin Jones Chair
The USMEF Beef and Allied Industries Committee met May 26 at the USMEF Board of Directors Meeting and Product Showcase in St. Louis, Missouri.
USMEF President and CEO Philip Seng updated the committee on the Trans-Pacific Partnership (TPP), emphasizing the importance of TPP approval to keep U.S. beef competitive in the Japanese market.
“The outcome of the TPP for the beef industry is fabulous,” Seng said. “Right now we’re subject to a 38.5 percent duty in Japan. For the major markets, that’s the highest duty in the world for beef. Under TPP this is going to come down to 9 percent over the next 15 years, and that is truly an accomplishment. This was a great collective effort that will pay a lot of dividends for our industry down the road.”
Importantly, upon implementation of TPP the duty will drop by at least 10 percentage points, eliminating the advantage Australian beef enjoys in Japan today.
Seng also reported on U.S. beef recently regaining access to South Africa, which is viewed as a promising market for beef livers, and to Israel. He discussed ongoing efforts to regain access to China, which is the world’s fastest-growing beef import market but has been closed to U.S. beef since December 2003. Through April, China’s 2016 beef imports were up 68 percent year-over-year in volume (191,993 metric tons) and were 63 percent higher in value at $868.2 million.
Joel Haggard, who is based in Hong Kong as USMEF senior vice president for the Asia Pacific, expanded on the China discussion.
“Don’t worry about demand for beef in China – there’s plenty of demand there – what we need is access,” he explained. “And the opening of this market is going to be delicate, because it’s difficult to export anything to China, especially meat. We have to get this right, because exporters don’t want a half-million dollar container of beef getting rejected because of some little misstep.”
USMEF Economist Erin Borror updated the committee on global beef supplies, and the reduction in Australian production this year and over the near-term. Following three drought years, Australia is now rebuilding its herd and its production and exports are down double-digits. This is opening opportunities for U.S. beef to regain market share, especially in Japan and Korea.
Dan Halstrom, senior vice president of global marketing, provided an overview of USMEF’s unified export strategy (UES) for Fiscal Year 2017. The UES is a comprehensive document that USMEF submits to USDA each year, outlining priorities for use of USDA Market Access Program and Foreign Market Development Program funds. Halstrom explained that each of the past two years, USMEF held two full-day stakeholder workshops – one for beef and another for pork – in which USMEF members provided input and feedback on the UES and asked questions regarding specific funding priorities. He reported that these workshops were very well-received by members and have been of great assistance to USMEF in preparing the UES, which was submitted to USDA in early June.
In a panel discussion, USMEF directors from South Korea, Mexico and Japan provided updates on marketing activities and strategies, describing how USMEF is capitalizing on the improved competitiveness of U.S. beef in their respective markets:
- Jihae Yang explained that Korea’s domestic beef supplies are extremely tight, creating excellent opportunities for U.S. beef – especially chilled cuts – to gain new customers. First-quarter import data show nearly a 50 percent year-over-year increase in chilled U.S. beef entering Korea, with U.S. market share increasing from 33.9 percent a year ago to 38.7 percent in 2016.
- Chad Russell discussed the improving outlook for U.S. beef, despite ongoing economic challenges in the Mexican market. While the peso has struggled to maintain value versus the U.S. dollar, Mexico remains a key market for U.S. beef, with export opportunities enhanced by declining domestic production. USMEF-Mexico recently launched a series of educational seminars designed to expand demand for underutilized muscle cuts and variety meat. After a difficult first quarter, April exports to Mexico increased 19 percent from a year ago in volume (20,435 metric tons) and 11 percent in value ($89.5 million).
- Takemichi Yamashoji explained how the Japan-Australia Economic Partnership Agreement imposed a significant tariff disadvantage on U.S. beef, but with Australian supplies tightening the U.S. industry is well-positioned to reclaim market share in 2016.
Gerardo Rodriguez, USMEF marketing director in Mexico, Central America and the Dominican Republic, detailed USMEF’s retail marketing efforts in this region, including efforts to educate supermarket customers on proper grilling and cooking methods for U.S. beef. Consumers in Central America have a strong preference for a few selected cuts, so USMEF is focused on education and promotion of additional beef items.
The committee also approved a resolution in support of the new Beef Industry Long Range Plan, which covers 2016 through 2020. The resolution notes that the first core strategy contained in the plan is to drive growth in U.S. beef exports, and it establishes a goal of growing the value of U.S. beef exports to equal at least 16 percent of total beef value (in recent years, exports have generally been 12 to 14 percent of total value). The plan also identifies three strategic initiatives through which the industry is to achieve this goal:
- Increase market access
- Adopt animal I.D. traceability systems
- Promote the unique attributes of U.S. beef in foreign markets
Because the new Beef Industry Long Range Plan identifies international markets as a key core strategy and emphasizes the importance of expanding U.S. beef exports, the committee felt it was important for USMEF, as an industry partner, to recognize this and support it in the form of a resolution. I am pleased to report that the resolution received unanimous approval the following day from the USMEF board of directors.
If you have questions about any of the topics covered by the Beef and Allied Industries Committee or would like further information, please feel free to contact me at firstname.lastname@example.org or email staff liaison Greg Hanes at email@example.com.
Cevin Jones is a cattle feeder from Eden, Idaho, who represents the beef/veal producing and feeding sector on the USMEF Executive Committee.
Reports from USMEF’s other standing committee meetings will be in upcoming editions of the Export Newsline.