Last year, 99% of growth in beef demand came from outside U.S. borders. Here's how we can capture even more.
It's what every beef producer wants to hear: “More people are eating beef.” What's surprising is that many of these new beef consumers are an ocean away.
Consider this: last year world red meat demand grew 1.43 million metric tons. Of this total, U.S. beef demand grew 10,000 metric tons — that's barely 1%. The other 99% of growth was outside the U.S., reports Philip Seng, president and CEO of the U.S. Meat Export Federation (USMEF).
Those numbers indicate there are some huge opportunities to sell more U.S. beef — and ultimately bring more money back to America's beef producers.
We're already lassoing some of that global potential through the USMEF's marketing efforts, much of which is funded by checkoff dollars.
For example, Seng calls 2000 “a banner year for the U.S. red meat industry.” Beef exports were up 12% in volume last year — and are up 245% since 1990. Beef exports now account for nearly 13% of U.S. beef production and generate an additional $3.6 billion annually.
Seng attributes this global surge in beef demand to rising per capita incomes and a growing middle class in other countries, as well as declining self-sufficiency. He says there's also a dedicated effort by U.S. packers to promote exports. And, USMEF strives to introduce beef buyers to sellers and cement relationships in these developing countries.
Despite potential for the U.S. to tap into this huge global beef market, there are, of course, some hurdles. Top on the list are food safety, foreign competition and trade regulations.
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Here's a rundown on what the American beef industry will need to do to keep U.S. beef in the global market:
1) Focus On Food Safety
Richard Ali, director for USMEF in Europe, Russia and the Middle East, sums up the future for beef exports with this sentence, “Food safety is paramount.”
Ali says lessons learned in the European Union (EU) indicate that consumer confidence in beef has eroded due to the bovine spongiform encephalopathy (BSE) and foot-and-mouth disease (FMD) outbreaks.
That's been reflected in a dip in U.S. beef exports during the first quarter of 2001. U.S. beef exports are down 5% in volume and down 13% in value. (Some folks also attribute this to a weakening economy in some countries.)
But for the U.S. there is a silver lining: because of FMD and BSE, the EU has been shut out of 94% of export markets for beef and 73% for pork. Ali says this means beef markets to Russia, Egypt, the Middle East and the Philippines — that were once tapped by the EU — are now fair game.
While there is competition for this business from big beef exporters like Australia, New Zealand, Brazil and Argentina, he says the U.S. has advantages. For one, no cases of BSE or FMD have been confirmed in the U.S., and American beef has a reputation for safety.
To maintain the integrity of U.S. beef and these export opportunities, Ali says America will need to continue its vigilance.
Mike Zerr, a USMEF marketing specialist, adds, “The U.S. needs to position its beef as safe and consistent.”
2) Be Branded
Like U.S. consumers, global consumers are demanding products that are branded. Beef is no different.
“Especially in Japan, there's an increase in the number of program beef arrangements,” says USMEF's Joel Haggard, vice-president for USMEF in the Asia Pacific.
“This is beef that is farm identified all the way to the retailer,” he explains. “Rather than ‘U.S. beef,’ Japanese consumers want branded products that tout a story like healthy attributes, certain fat trim or specifications, or originating from a certain beef plant or farm. He cites Creekstone Farms, Kansas Beef and Super U.S. Beef as some of the branded names now in Japanese retail stores.
“It's happening in the U.S. and now more overseas,” he adds. “Branded beef products have been available for several years in Japan but demand is increasing.”
Country of origin labeling of beef is also becoming an issue. For instance, by Jan. 1, 2002, Korea is demanding a traceback system, Haggard says.
“They want any beef they import to come with records that show the animal was in the country it was harvested in for at least six months,” he says. “This is going to be a problem for the U.S. that could stop trade to Korea. We are trying to negotiate.”
Nonetheless, branded beef that can be traced to the producer appears to be the wave of the future.
3) Persistence Pays
Regarding USMEF's future marketing plans, Seng says his team's philosophy remains as it's always been: “slow and steady wins the race.”
“My philosophy is that marketing can be an exact science. The hunch and guess don't work,” Seng says. “We don't have to take risks with your dollars (checkoff funds) if we have enough information. We also work very closely with packers.”
He explains that USMEF uses a grid approach in each country it goes into. “We focus on trade, food service, retail and then consumers. We're very deliberate how we work through a market. We're long term. We'd rather sacrifice a short-term sale for a long-term gain.”
With that approach, predictions call for beef exports to reach almost 2 million metric tons in the next six years.
Going To Number One
The U.S. is on track to replace Australia as the world's largest exporter of beef. While Japan has long been the largest U.S. beef export market in volume and value, additional markets are showing great promise in other countries
Mexico is the U.S.'s second largest importer of American beef. And, already for the first quarter of 2001, U.S. beef exports to Mexico are up 13% from last year.
USMEF reports beef exports have increased a lot south of the U.S. border since 1998 as a result of the economy becoming a true democracy. “We expect slow incremental growth here,” says Homero Recio, USMEF vice president for Latin America.
Another factor contributing to Mexico's increased demand for U.S. beef stems from Mexico's decline in production of beef and pork. That points to a long-term opportunity for the U.S.
Despite the BSE and FMD scares, Korea is another country that has upped their imports — taking in 7% more U.S. beef during the first quarter of 2001 than last year.
Haggard reports Korea's weakening economy has tempered growth so far this year, but the trend is definitely up.
However, some trade issues are cropping up with Korea, even though their market is now liberalized. For example, by January 2002 Koreans want country of origin labeling on beef.
Haggard says the U.S. is trying to negotiate, but this has the potential to halt U.S. beef trade to Korea.
Haggard sees Taiwan as a large potential importer since they have no domestic production of beef. And, the heavily populated greater China region offers big growth potential as their economies steam ahead and they become part of the World Trade Organization (WTO).
For now, U.S. exports to the EU won't increase because the hormone ban hasn't been resolved. But those countries also have potential as large U.S. importers — especially since 4% of beef, 8% of sheep and 2% of pig populations in England have been destroyed due to FMD.