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Factors Influencing Red Meat Exports
Travis Arp, Ph.D.
Technical Services Manager
U.S. Meat Export Federation
The Landscape
Tight Global Beef
Supplies
Global Economic Growth
Market Access Issues
Strong U.S.
Dollar
Large 2015 Hog Supplies
U.S. Beef Exports
• 2014 beef exports…
– $7.14 billion value (+16%)
– 1.197 MMT (+2%)
– 14% of production
– Added $300.36/hd (+ $55.40)
– Top Markets (value) • Japan
• Hong Kong
• Mexico
• Canada
• Korea
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
Bill
ion
s
Value of U.S. Beef Exports
Variety Meats
Beef
-
200
400
600
800
1,000
1,200
1,400
Tho
usa
nd
me
tric
to
ns
U.S. Beef & Variety Meat Exports & Forecast
U.S. Pork Exports
• 2014 Pork Exports…
– $6.67 billion value (+10%)
– 2.178 MMT (+2%)
– 26.5% of production
– Added $62.45/hd (+ $8.50)
– Top Markets (value) • Japan
• Mexico
• Canada
• Hong Kong/China
• Korea
-
500
1,000
1,500
2,000
2,500
3,000
Tho
usa
nd
me
tric
to
ns
U.S. Pork & Variety Meat Exports & Forecast
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
Bill
ion
s
Value of U.S. Pork Exports
variety meats
Pork
Strong USD Not Good for Exports
Shrinking Beef Supplies
-800
-600
-400
-200
0
200
400
600 W
orl
d
U.S
.
Bra
zil
EU
Ch
ina
Ind
ia
Arg
enti
na
Au
stra
lia
Mex
ico
Paki
stan
Ru
ssia
Can
ada
Tho
usa
nd
Met
ric
ton
s
Forecast Change in Beef Production 2015 - 2014
Source: USDA/FAS April 2015
Decreases expected for our primary competitors
MLA’s 2015 Outlook for Australia
• Herd: 26.8 million head, 2 decade low
• Beef production: 2.3 mil mt carcass wt., -11%
• Beef exports: 1.15 mil mt product wt., -11%
• Beef Slaughter: 8.2 million hd, -11%
• Live Cattle Exports: 990,000 hd, -23%
U.S. cattle prices remain significantly higher than prices for other major exporters
One sign of strong demand…
$0
$5
$10
$15
$20
$25
$30
$35
$40
2009 2010 2011 2012 2013 2014
Bill
ion
s
Nicaragua
Belarus
Mexico
EU28
Argentina
Paraguay
Uruguay
Canada
New Zealand
India
Brazil
U.S.
Australia
Global beef export value has basically doubled since 2009, to about $37 billion in 2014, up 18% from 2013
Source: Global Trade Atlas & USMEF estimates
China, EU & US > 80% of World’s Pork
0
20,000
40,000
60,000
80,000
100,000
120,000
Tho
usa
nd
me
tric
to
ns
Global Pork Production
Others
S. Korea
Japan
Mexico
Philippines
Canada
Vietnam
Russia
Brazil
United States
European Union
China
Source: USDA/FAS
2015 Increases in Production to be Led by the U.S.
-200
-100
0
100
200
300
400
500
600
700
Tho
usa
nd
me
tric
to
ns
Forecast Change in Pork Production 2015 - 2014
+0.4%
-0.2%
+6%
+1% +2% +1% +1.4% +1% +4% +1% +0.2% +3%
Source: USDA/FAS
Race to the bottom for major
exporter prices
-5% -11%
-15% -29%
-17% -29%
-25%
+15%
+19%
+20% +3% +2%
*Vietnam and Philippines prices are for January
EU Competition
• China/HK, Japan, ASEAN and Korea accounted for 73% of EU export volume, up from 60% in 2013.
• The increase in exports to these markets was +395,000 mt.
• This alone nearly offset the 444,000 mt that would have gone to Russia.
Free Trade Agreements
BSE
BSE
BSE BSE
BSE
BSE Hormones
Hormones
Hormones Beta Agonists
Beta Agonists PRT’s
PRT’s
BSE
PRRS
PRRS
Trichinae Trichinae
Animal Health Concerns
• Import restrictions due to animal disease
– BSE
– PRRS
– Trichinae
– FMD
– ASF
– HPAI
• U.S.: robust animal disease control system
– World Organization for Animal Health (OIE) Standards
• Importance of traceability?
– Lack of national traceability program affect ability to regain market access?
Bolivia
Morocco
South Africa
Saudi Arabia
China
Brazil
Kenya
Australia Argentina
Markets Closed Due to BSE Concerns
Paraguay
Venezuela
LT30 Only Markets
Ukraine South Korea
Thailand
Singapore
Taiwan
Russia (Currently closed)
Japan
Market Displacement
44%
51%
5%
76%
12%
12%
52% 38%
10% JAPAN
2003 2008 2014
21%
68%
10%
65% 14%
21%
55% 35%
10% KOREA
United States Australia Others
SPS Market Access Issues
Hormones
• EU, Russia, China, Egypt?
• Codex vs. FDA vs. Precautionary Principle
Beta Agonists
• EU, Russia, China
• AMS Never Fed Beta Agonist PVP
• Non-Use vs No-Residue
PRT’s
• EU, Singapore, Japan
• Food Additive vs. Processing Aid
West Coast Port Situation
• U.S. beef to Asia each month: 48,000 mt & $330 million
– Chilled: near 12,000 mt & >$100 million per month
• Shelf life for chilled beef = 60 days
– Freezing in transit
• Risk of lost retail shelf space/features as buyers switch to competitor products
• Added costs
Stiff Competition
Overall in the year of the Sheep…
BEEF • Limited global beef supplies will help sustain historically
high prices • Product will flow to those who are willing and able to pay • China remains huge market access variable
PORK • Record hog production drive down domestic prices,
improve competitiveness in global market • Strong EU pork competition, distorted trade flows • Russia and limited China opportunity due to market
access
Overall in the year of the Sheep…
• Effects of West Coast Ports and COOL?
• Leader in grain fed beef production
– Unique aspects of U.S. beef and pork should sustain export success
– U.S. is low cost grain fed producer
• World leader in production and efficiency
– How does that effect our global position?
– Animal health, animal welfare, food safety, sustainability