Previous Page: Outlook for Asia

“But, this does not resolve the hormone dispute,” says Gregg Doud, National Cattlemen's Beef Association chief economist. “We still have a long way to go before this issue is resolved to our satisfaction.”

For access to the EU market, health and safety records are a must — and traceability and identification are expected, says Monty Brown, U.S. Meat Export Federation (MEF) processing retail consultant.

He explains that while overall demand for food in the EU is fairly “inelastic” — not sensitive to price changes — there's evidence consumers are trading down and looking for cheaper cuts of meat.

Latin America

As in other countries, Mexican beef prices have continued to increase over time. However, the quality of beef consumed has also improved, says Ramon Lazano, vice president RYC Alimentos, Puebla, Mexico.

In 1980, nearly all beef consumed was equivalent to USDA Cutter beef. In 2000, more than 20% of beef was the equivalent of USDA Select and 10% was the equivalent of USDA Choice. And, with the Mexican beef-production deficit pegged at about 400,000 tons this year, the dependency on higher-quality imports continues to grow.

Lazano says market drivers for beef consumers in Mexico include price, expectations of no subcutaneous or seam fat, freshness as perceived by color, wholesomeness, a campaign against obesity, convenience (including marinated, shredded and “enhanced”) and organic products.

Sizing the competition

In assessing the competition from beef producers abroad, two aspects must be examined:

• How other countries' producers compete against U.S. producers in the U.S. domestic market.

• How they compete with the U.S. in foreign markets.

Brazil leads the global competition in beef exports by volume. Meanwhile, Brazil remains closed out of export markets for fresh, frozen or chilled beef to the U.S., Canada, Mexico and most Asian countries due to threats of foot-and-mouth disease (FMD).

FMD notwithstanding, Brazilian beef will continue to compete in different markets than U.S. grain-fed beef.

“Nearly 95% of Brazilian beef is grass fed from Zebu-type cattle,” Perkins says. “This beef will go to different markets than U.S. beef.”

Brazil's meatpacking industry has been hit hard by the global credit crunch. In April, the Brazilian government approved a $4.6 billion line of credit at 11.25% for that country's meatpackers.

Short term, Brazilian beef exports to neighboring Latin American countries, Russia, the Middle East and Europe will be buoyed by favorable exchange rates.

Long term, the Brazilian Ministry of Agriculture is bullish on its beef industry — forecasting a 93% increase in exports during the next 10 years. If so, Brazil would account for upwards of 60% of total world beef trade; up from the current 30%.

Australia's beef price competitiveness is allowing Aussie producers to increase market share despite weakening global demand. Japan is Australia's leading market, followed by the U.S.

Combined with the low value of the Australian dollar, exports are very affordable — about 40% lower than what they were a year ago, says Meat and Livestock Australia (MLA) chief analyst Peter Weeks.

As already hamburger-hungry U.S consumers look toward cheaper meal alternatives, demand for lean Australian manufacturing beef remains strong.

“The U.S. is proving to be a good market as the Australian dollar has made our exports more affordable,” Weeks says.

Australia's system-wide cattle and beef traceability system gives it an edge that's been boosted by the Australian dollar's depreciation.

“We've had traceability systems in place that really do put us a step ahead,” Weeks adds.

Speaking at an MLA and Live-Corp industry reception in Bahrain last March, Tony Burke, Australia's federal minister for agriculture, fisheries and forestry, highlighted the work of industry to improve animal welfare.

“We have a very good story to tell — the care of the animals, the shading of the animals, the different technologies that are now being used.”

Beef from New Zealand, which accounted for 20% of U.S. imports in 2008, will be affected by the international dairy market. USDA's Economic Research Service (ERS) says after several years of dairy herd expansion due to high international market prices for milk and dairy products, there has been excess production since these prices collapsed in late 2008.

Next Page: Back in the USA