Just 20 years ago, the U.S. beef industry had virtually no export markets. This deficiency worried far-sighted beef producers. So, they retrofitted their industry's marketing function in the late-'70s to include an export option. The result was creation of the U.S. Meat Export Federation (USMEF).

USMEF's activities have helped U.S. beef exports grow to 1 million metric tons in 1998. The U.S. has become the world's pre-eminent beef exporting force, winning huge market shares from veteran exporters like Australia and New Zealand.

We're now entering the third full decade of U.S. export activity. What's the future hold? Thad Lively, USMEF vice president for international programs, offers this analysis.

The Major Leagues In the 1990s, the largest U.S. trading partners were Japan, Canada, South Korea and Mexico. They will likely continue to dominate the export picture in the next decade.

Japan has been the No. 1 U.S. beef trading partner - accounting for 50% of U.S. beef exports - since it liberalized its markets in April 1991. The volume grew to a high of 514,657 metric tons in 1996, but the growth came to a temporary halt in 1997 because of Japanese concerns about BSE, E. coli and other food safety issues, as well as the decline of the yen against the U.S. dollar.

The setback appears temporary. Exports to Japan from January to November 1998 were up 9% in volume compared to 1997. This is despite higher prices due to the yen's fall. At the same time, the U.S. won almost 51% of the market vs. Australia's 46%.

Lively sees several factors favoring further growth in Japan - a decline in Japan's dairy herd and the Japanese government's projection of a 30-40% jump in beef consumption over the next five years. Alone, each factor is enough to spur increased beef imports. Combined, they bode well for continued growth in Japan.

South Korea, like Japan, has been hit hard by the Asian financial crisis, causing beef imports from the U.S. to fall by about half in 1998. The question is how deep the setback will be for a nation that will liberalize its market for beef in 2001.

"People are guardedly optimistic that by the end of 1999 the South Korean market will pick up," Lively says. "But, because the market is not fully liberalized, it will operate differently than a free market."

In South Korea's current buying system, U.S. beef exporters can't deal directly with the final users. Instead, the quasi-governmental Livestock Products Marketing Organization (LPMO) and supergroups, comprised of buyer consortiums within various food-related industries, divvy up the quota.

Market conditions in the wake of the financial crisis have hurt the viability of LPMO and some supergroups. Lively says the U.S. government now will work to convince South Korean leaders to open the quotas to end users, thus opening up sales. At the same time, the U.S. will continue to press South Korea to abide by its agreement to fully liberalize in 2001. Currently U.S. beef has increased its share of the South Korean beef import market from 55% to 72% since the financial crisis struck.

Mexico defies predictions. The country has played a vital role as a major U.S. beef buyer for the past decade. When the European Union (EU) quit buying offal products from the U.S. after the growth-promotant ban, Mexico increased its offal purchases at the same time that USMEF was developing new outlets for variety meats in Egypt and Russia.

Its resiliency is notable. After the 1994 peso devaluation followed a massive buying year in the first year of NAFTA, observers predicted Mexico would fall hard. It did for one year, then came back, taking just two years for beef sales to surpass NAFTA's record year. In 1998, sales were up 48%.

USMEF continues to develop the retail and foodservice markets in Mexico's major cities and resort areas. It's too early to say what effect the Brazilian economic slump might have on Mexico, but its future remains sterling.

Canada will also remain a top player. Its proximity to the U.S., and its sharing of the English language and the North American culture will keep it a grain-fed-beef loving country. The only unknown is the strength of its own beef industry. The U.S. is keeping a wary eye on the movement of major packers and feeding industries to the Canadian provinces.

Minor Leagues A number of countries have come from near zero on the U.S. beef purchasing chart to become strong U.S. beef customers in the 1990s. At present, this second tier of U.S. beef-buying countries is led by Russia, which prefers its beef in sausages or other processed products.

"Right now, Russia's economy is in the tank," Lively says, "but its potential is good. In fact, Russia's economic depression could work to give U.S. beef further exposure in the market."

Russia has bought U.S. offal products - principally livers - at the rate of 50,000 to 60,000 tons a month during the late 1990s. A smaller market has been the higher quality Hotel Restaurant Industry (HRI) trade.

The U.S. in November 1998 announced a $626 million food aid package to Russia to include at least 120,000 metric tons of beef. This program will allow USMEF to teach Russian buyers how to use a wider variety of boxed beef cuts.

"We will try to educate the Russian buyers," Lively says, "so we can develop a niche for beef as a primary source of meat protein for the Russian consumer."

Taiwan has enjoyed a healthy economic expansion, much less affected by the region's economic travails than many of its neighbors. Taiwan has relied on Australia to supply retail wet-market sector, and U.S. Choice product for its Western-style foodservice sector and upscale retail outlets. Beef exports to Taiwan fell in 1998 due to a stronger U.S. dollar, but many experts expect Taiwanese imports to rebound more rapidly than the rest of Asia.

U.S. beef also is moving into Taiwan's growing number of hypermarts - bargain retail outlets that serve as a bridge between the wet markets and upscale retail stores. USMEF is encouraging hypermart meat departments to place U.S. meat sections in the stores to give U.S. beef higher visibility.

"Taiwan has been a steady performer as a high-value market for us," Lively says. "It also taught us valuable lessons about how to approach the potentially huge market in mainland China."

Only offal products from the U.S. are allowed into Taiwan through a bilateral agreement between the two countries. This monopoly will continue until Taiwan joins the World Trade Organization (WTO), an action that will force Taiwan to open its markets.

South America offers tantalizing opportunities. Although many South American countries have large herds of beef cattle, the U.S. has been able to carve out niche markets by supplying unique cuts to retail and foodservice. Our best South American customers are Colombia, Brazil and Peru.

"We have shown that we can compete with Argentina and Brazil in this market," Lively says. "Though none of the volumes has proven significant, it shows what the U.S. can do if we get in a country and work with the trade."

U.S. beef exports to the Caribbean Islands primarily go to resorts catering to North American and European vacationers. USMEF has positioned underutilized cuts from the chuck and round in this market, helping U.S. beef gain a presence on hotel buffets in all-inclusive properties (those that charge one fee for hotel, meals and drinks).

Singapore leads a growing list of prospective ASEAN (Association of Southeast Asian Nations) countries that will become solid U.S. beef buyers. USMEF considers Singapore's economy structurally sound, but it will be 2000 before financial problems abate in nearby Indonesia and Malaysia and allow Singapore's economy to expand.

In Singapore, USMEF has established a foodservice training center for native Asian chefs. It will instill a loyalty to U.S. beef among the future foodservice decision-makers in all of Asia.

Egypt anchors a growing market in the Middle East that also includes Saudi Arabia and the United Arab Emirates.

"Egypt is a strong market for livers," Lively says. "Trade barriers keep us out of the cut market since Egypt bans meat imports with greater than seven percent fat content." Other countries in the Middle East, especially Saudi Arabi and the United Arab Emirates, offer high value outlets for U.S. beef. In fact, the Middle East is the second highest value market for U.S. beef after Switzerland at about $5 to $6 per pound on average.

Long-Term Prospects Many U.S. beef producers are incensed over the EU's nose-thumbing at the WTO's demand that Europe drop its ban on beef treated with growth-promoting hormones. Yet the long-term potential of the European market should not be overlooked. With 350 million wealthy consumers and a long beef-eating tradition, the countries of the EU represent a truly significant market opportunity, Lively says. In the near-term, however, the U.S. can expect continued frustration as the EU seeks to protect its producers through a variety of protectionist policies.

China also offers tantalizing long-term trade possibilities. Yet, because of China's low average income, it will be at best an offal market for some time. China's tariffs make importation difficult, but some trade is done through gray channels. Lively said China will open up once the country becomes a WTO member, but that's also in the future.

"In China, we're focusing our attention on Shanghai, which has an incredibly dynamic economy," Lively says. "Its retail sector is growing faster than any other city in the world."