If a common thread ran through the 2006 World Meat Congress in Brisbane, Australia, last month, it wrapped around three evolving consumer demands — transparency, traceability and trust.

“We must all start with, and center on, the consumer,” says David Hughes, Imperial College professor of food marketing, London, England. “And as disposable incomes around the world increase, competitive meat protein providers must provide three “Ts” — production transparency, traceability demands and trustworthiness in their methods.”

Patrick “Paddy” Moore, Dublin, Ireland, International Meat Secretariat (IMS) chairman, says the world has “never seen global competition for meat protein markets this intense. And we haven't seen anything yet.”

Brazilian Marcos Fava Neves, University of São Paulo professor of food marketing strategy, wonders why livestock traceability isn't being adopted in some countries. Calling it a “non-negotiable foundation of trust,” he asks, “without traceability, how can you be held accountable — or be rewarded — for what you produce?”

Here's a snapshot of the beef situation in some selected countries:

Argentina

A longtime player in the world beef market despite recurring food-and-mouth disease (FMD) outbreaks, Argentina is fourth in total world beef exports. It exported nearly 600,000 metric tons (mt), worth US$1.4 billion, to more than 80 countries last year. Yet, with a per-capita consumption of nearly 135 lbs./year, domestic consumption accounts for 80% of Argentina's beef production.

Under the General Agreement on Tariffs and Trade, significant access is given to Argentina in the European Union (EU) through the “Hilton Quota.” Most of the high-end Hilton beef from Argentina's total EU tariff rate quota (TRQ) of 59,100 mt (mt = 2204.6 lbs.) goes to Germany.

Besides FMD, political and economic setbacks continue to plague Argentina. Earlier this year, Argentine president Nestor Kirchner increased federal taxes on beef exports and cancelled other tax rebates in a bid to fight rising inflation and escalating food prices. The target was beef purveyors diverting beef supplies from the domestic market to meet export demand.

Argentine cattleman Horacio La Valle, Buenos Aires, says ranchers are paying the price of Kirchner's policies through a 15-25% reduction in prices. He says producers hope Kirchner soon realizes his errors.

“We must show the world we can be dependable producers of beef,” La Valle says. “I'm confident we'll soon be back in the world markets.”

Due to FMD, Argentine fresh and frozen beef remains locked out of NAFTA countries and major Asian markets.

Australia

Demand for Aussie beef in the North Pacific Rim skyrocketed after the discovery of BSE in North America. From 2003 to 2004, Australian beef exports rose nearly 41% to 393,000 mt, garnering a 90% share of Japanese beef imports. Over the same period, export prices for Aussie grass- and grain-fed carcasses increased 20% and 24%, respectively. Almost two-thirds of Australian beef is exported.

David Bailey, Australian Bureau of Agricultural and Resource Economics economist, says a new animal traceability program was critical in gaining ground in Japan.

“Though a large proportion of U.S. beef production is sourced from cattle 20 months of age or younger, few processors possess birth or production records,” Bailey says. He believes once the economic advantages of age verification and animal traceability are realized by U.S. producers, competition with Australia will intensify in the Pacific Rim.

The U.S. imports mostly lean beef for manufacturing from Australia. It's blended with higher-fat U.S. trimmings to create specific fat/lean ratios for hamburger.

Australia last filled its U.S. TRQ of 378,214 mt (expanding to 448,214 mt by 2022 under the U.S.-Australia Free Trade Agreement) for fresh/chilled and frozen beef in 2000, and came close in 2004. Exports to the U.S. dropped in 2005 to 300,406 mt. In-quota chilled/frozen beef tariffs of 22¢/lb., and 4-10% on processed beef, were eliminated in 2005 under FTA.

Short term, Aussie beef exports to the U.S. will decline due to higher price and Uruguay's inroads into the beef trimmings market. Most Aussie live cattle go to Philippines, Malaysia, Egypt and Indonesia, and are forecast to rise to 756,000 head/year by 2010-11, up from 550,000 head in 2004-05.

Brazil

Brazil leads the world in the production and export of nearly every meat protein, says Jeremiah O'Callaghan of Coimex Trading Co., São Paulo. From a national herd of 202 million head, Brazilians harvested 43 million cattle in 2005.

The Russian Federation, EU, Egypt and Chile are the leading destinations. NAFTA countries, Japan and Korea import only thermally processed beef due to FMD-related restrictions (U.S. — 52,723 mt for $203 million in 2005).

While cattle numbers soared dramatically during the past decade, Brazilian consultant José Puoli says growth shows signs of slowing — possibly retracting — as cattle profitability diminishes.

He says competition for the better ag land is intense as farmers scramble to grow sugarcane for fuel-ethanol production. In the state of Paraná, for example, 2.2 million acres of pasture will soon convert to sugarcane for the 90 mid-scale ethanol plants being built or planned in the state.

The conversion is pushing cattle north and northeast into harsher, drier and more isolated regions where costs and risks are higher, he says. The result is more dependence on Bos indicus breeds, and decreased productivity due to increased age at breeding and slaughter, and decreased dressing percent.

“Only a fraction of our cow herd will produce high-quality beef,” Puoli says. “But don't forget, 1% of 200 million animals makes a lot of beef.”

China

As Asia experiences dramatic increases in per-capita meat consumption, China led the way by doubling consumption from 1983 to 1993. With more income and purchasing power, food safety and quality is becoming an issue to Chinese consumers.

The rapid consumption rise will continue through 2020, says Zhou Guanghong, Nanjing Agricultural University vice president. He notes China's proportion of meat production by species has become more balanced in recent years, but pork still dominates. Urbanization and rural income growth fuel the massive increase in meat demand, with increases in rural areas — where 70% of China's population lives — being twice that of urban areas.

Guanghong says Chinese consumers are becoming more “time poor,” utilizing more processed meat products in their diet and consuming more meat outside the home. In fact, he says “out of home” expenditures for meat have surpassed in-home consumption in 11 of China's 31 provinces.

“China will import a lot of meat for a long time,” England's David Hughes says. “In the end, Brazil will become China's major beef supplier because it's the world's least-cost supplier — and its ‘form’ suits the Chinese just fine.”

European Union

Continent-wide beef production is restructuring after reform of the European Union (EU) 2003 Common Agricultural Policy (CAP) program. The Doha Round of WTO negotiations pressured substantial changes in CAP. And as CAP became too expensive for the original EU member states, the subsidy payments would have broken the 10 less-flush, new-member states.

Thus, on Jan. 1, 2006, the EU beef industry began evolving into a new market-based economy. Due to decoupling, along with increased milk-production efficiency and fewer dairy cows, it's assumed total beef production in Northern Europe will fall.

Ironically, continental Europe has experienced a beef shortage due to rising consumption and a ban on United Kingdom (UK) beef due to BSE.

But UK's cattle harvest and beef production are expected to increase in 2006. With the end of the Over 30-Month (OTM) Scheme, about 500,000 “extra” cattle born after Aug. 1, 1996, will be available for human consumption. But even after the OTM rule change is taken into account, the net EU-25 import requirement is set to rise to fully 350,000 mt in 2006.

A Scottish abattoir manager says EU-wide cattle production was permanently damaged by failed subsidy schemes. Cattle farming had become a numbers game where the financial rewards from sitting in the house calculating stocking rates were greater and more secure than improving technical efficiency.

“There was no incentive to produce quality, as value was determined by carcass weight rather than conformation,” says John Craig, AK Stoddart operations director, Edinburgh, Scotland. “No one paid attention to animal performance or farmer efficiency.”

In Ireland, Bernard Smyth, Teagasc chief drystock adviser, urges farmers to do profit analysis in planning for the new market-driven environment.

“An increase in producer prices will best be achieved through expanding partnerships between farmers and meat processors,” he says. “We hope, with premia decoupled from production, there'll be a much higher premium for quality beef.”

Russian Federation

The Russian Federation is the world's second-largest beef importer. And, after the U.S., Brazil was Russia's chief beef supplier last year, providing nearly half of its 750,000 mt of total imports.

The Russian protein market is among the most fickle and unpredictable, says a senior IMS member. It also appears to be among the most corrupt. He says Russian market access is best achieved by identifying key import inspectors, occasionally “giving them big bags of money and treating them to hotel rooms in Amsterdam's red light district.”

Apparently the U.S. isn't playing that game. U.S. beef and variety meat exports to Russia in 2005 were 3,250 mt ($1.87 million value) — a fraction of the 71,400 mt ($59.5 million) exported in 2002. USDA expects the picture to be even more dismal in 2006.

Russia halted chicken imports in April, after Russian poultry producers protested in Moscow demanding limits on imports. This appears to be contributing to the protein glut in many exporting countries.

In 2002, meat-protein markets were pounded when Russia banned U.S. poultry, claiming diseased chickens and insufficient veterinary monitoring on U.S. poultry farms. Others, however, say the ban was Russia's response to the U.S. imposition of hefty tariffs on Russian steel.

Uruguay

Uruguayan beef production and exports have expanded since 1995 when it was declared free of FMD with vaccination. Strong investment by the country's beef industry significantly increased harvest and processing capacity. In fact, Uruguayan cattle harvest set records in 2004 and 2005, and 2006 harvest is also expected to increase significantly.

About the size of Oklahoma, 87% of Uruguay is in cattle farms, with grass finishing dominating. It also boasts the world's highest cattle:person ratio at 3.8 head/person.

Increased selection pressure within Uruguayan Hereford and Angus breeds has allowed a reduction in average harvest age, higher turnoff weights and slight jumps in dressing percent (54% average). Uruguay also boasts the world's most effective animal traceability system based on electronic ID and a central databank.

NAFTA is 78% of Uruguay's export market. U.S. imports of fresh and frozen beef from Uruguay resumed in May 2003 under a 20,000-mt TRQ. Of this, 80% is lean trimmings. Despite a 26.4% over-quota tariff, imports in 2005 increased 55.4% from 2004.

Last year, Uruguayan beef importers paid the U.S. Treasury nearly $100 million in over-quota tariffs, says Pablo Caputi, Instituto Nacional de Carnes (INAC) economist. Because tariffs are considered in wholesale beef prices, Caputi says INAC has been in Washington, D.C., lobbying for a raise in Uruguay's TRQ. With Brazil and Argentina waiting to enter the NAFTA fresh-beef markets, it's unlikely U.S. trade negotiators will budge on raising Uruguayan quotas, however.