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1 Paul Clayton U.S. Meat Export Federation Global Beef Trade Outlook and Opportunities Consolidated Beef Producers.

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Presentation on theme: "1 Paul Clayton U.S. Meat Export Federation Global Beef Trade Outlook and Opportunities Consolidated Beef Producers."— Presentation transcript:

1 1 Paul Clayton U.S. Meat Export Federation Global Beef Trade Outlook and Opportunities Consolidated Beef Producers

2 The next 25 to 50 years Population Resource management Technology Knowledge Economic integration Conflict Governance

3 Future Global Beef Demand FAO Beef Consumption Estimates Source: FAO +22% +44% % change from base year 13 million mt every 15 years

4 ImporterYTD 2005Thru % change U.S.846,164Aug+4.0% Japan357,546Aug+14.6% Russia249,073Jun+27.3% E.U.304,239Jul+9.2% Mexico177,639Jul+30% S. Korea127,086Aug+11.6% Others711,990Jul+8.7% TOTAL2,482,672Jul+7.4% 2005 Beef Import DEMAND - YTD Beef/BVM Source: Global Trade Atlas, not including intra-EU trade

5 Value of Beef Exports ItemDomestic Use Exports (mt) Extra Value (million US$) Short RibsTrim121,000$388 TonguePet food35,000$328 Outside SkirtTrim50,500$166 Short PlateTrim163,000$63 Chuck Eye RollAs Is71223$43 IntestineRender32,000$35 TripeRender38,500$35 Rib FingerTrim14,000$27 Chuck Flap TailAs Is9,548$26 Ribeye RollAs Is18,212$24 USMEF Estimate,

6 Value of Beef Exports Total Exports equal $12.45/cwt Top Ten Items Represent 65% of all Beef Exports 60% of Value Derived from Muscle Meats, 40% from Variety Meats Total Extra Value: $1.2 billion per year $2.79/cwt per Head Slaughtered, $33.47/Head

7 What is the Market Potential?

8 Benefits of U.S. Red Meat Trade Global Red Meat Consumption U.S. Consumption Source: FAO

9 World Population Growth Historical Projected Double 1980 by 2050

10 Growing Agricultural Trade The worlds arable land is not distributed around in the world in the same proportions as is population. (No way for Asia to be self-sufficient) With population growth, urbanization and broad-based economic development in LDCs, more of world food production will move through trade. Agriculture in most LDCs is underperforming relative to its potential. Greater trading opportunities for LDCs would accelerate their economic growth and expand their food consumption faster than production, increasing their food imports.

11 Global GDP and Global Red Meat Consumption Source: FAO, World Economic Bank

12 Global Meat Consumption - metric tons - U.S. Consumption Source: FAO

13 Global Meat Consumption - Per capita in Pounds - U.S. Consumption Source: FAO

14 U.S. Production as a % of Global Consumption Source: FAO Global Consumption is outpacing U.S. production

15 U.S. Global Market Share Global Meat Consumption outside of the U.S. Source: FAO, USDA

16 Global Meat Consumption Source: FAO +34% +108% +30% +57% +22% +44% +22% +64% % change from base year +29% +67%

17 Global Meat Consumption Source: FAO +56%+113% +15% +24%

18 World Beef Exporters Source: Global Trade Atlas Australia U.S. S. America EU Canada New Zealand Other 29.3% 17.5% 15.5% 15.8% 7.5% 6.8% 7.5% (Brazil, Argentina, Uruguay)

19 World Trade in Meat as a Percent of Production Source: FAO Global Beef Market Share Source: USDA Estimates

20 Competition is Fierce

21 Top 10 Beef Export Markets in Common 2003 U.S.AustraliaBrazil 1JapanU.S.Chile 2MexicoJapanU.K. 3S. Korea Russia 4CanadaTaiwanEgypt 5RussiaCanadaU.S. 6EgyptIndonesiaHong Kong 7 MalaysiaSaudi Arabia 8TaiwanPhilippinesNetherlands 9IndonesiaRussiaItaly 10China Iran %95%93%73%

22 Self-Sufficiency Dependence on Exports Beef New Zealand Australia Uruguay Canada* Argentina Brazil U.S.* 592% 265% 257% 131% 123% 122% 98% Pork Canada Brazil EU-25 U.S. 180% 128% 106% 104% *U.S. – 2003, *Canada 2002, Others Source: USDA/FAS PSD Tables

23 Brazil 314 million farmable acres 151 million farmed

24 U.S. / Brazil Meat Comparison PRODUCTIONEXPORTS Mil MT Change% Change% Beef US % % Brazil % % Pork US % % Brazil % % Poultry US % % Brazil % %

25 Uruguay World Exporter –FMD Under Control US Quota 20,000mt –2005 imports 167,000mt over quota (26.4% duty) –Price per pound as much as $.75 under other importing countries

26 Australia U.S. Quota ,214mt379,000mt 307,000mt

27 US Beef Export vs. Import Summary 2003 Beef/BVM Exports 2003 Beef/BVM Imports 2004 Beef/BVM Exports 2004 Beef/BVM Imports Net 2003 Exports-Imports ($1.66-$1.21/lb) 2004 Exports-Imports ($1.18-$1.37/lb) $3.9 billion $2.6 billion $0.7 billion $3.7 billion $0.45/lb ($0.19)/lb

28 2004 Pork Export Premiums - Top 10 - Cut MT exported Export Prem. / pound Export Premium Bellies 61,600 $0.45 $ 61,080,099 Loins 129,485 $ ,147,688 Butts 40,428 $ ,929,942 Tenderloin 25,138 $ ,870,885 Picnics 168,855 $ ,453,561 Bungs 11,871 $ ,107,754 Feet 50,732 $0.07 8,178,401 Tongues 20,484 $0.16 7,232,334 Skins 42,891 $0.07 6,843,477 Jowls 15,990 $0.10$ 3,659,396

29 Exports Outpacing Imports

30 Avian Influenza

31 BSE Losses Top 10 Exported Cuts Source: USDA, USMEF Pre BSE Price 12/03 Post BSE Price 12/04Loss/lb Lbs / Hd Loss /Hd Annual Lost Value * Short plates $1.80$ 0.71$(1.09)40.0$43.60)$(1,155) Liver (.25)11.0 (2.75) (72) Short ribs (1.66)5.0 (8.30)(219) Intestine )7.5 (4.13)(109) Chuck roll (0.14)38.0 (5.32)(140) Tongues (3.55) )(329) Skirt (1.30)7.0 (9.10)(241) Rib Fingers (1.94)4.0 (7.76)(206) Tripe (0.56)7.5 (4.20)(111) Hanging Tndr (1.15)2.5 (2.88)(76) TOTAL 126(100.46)$(2,662) Or $ (8.04) per cwt * Based on USDA steer / hfr slaughter

32 BSE Impact on Japan Market … but not to Japanese meat supplies

33 Japan Beef Supplies 1.Eating less, yet paying more 2.Losers: N. America, domestic industry (f)% change Consumption (mt)903,781810, % Expenditures (yen)¥ 6,639¥ 6, % Imports (mt)520,096483, % –Australia289,123435, % –N.Z.18,05147, % Production (mt)353,695348, % Source: ALIC, USMEF

34 Beef Export Premiums Export premiums on these 5 cuts alone represent $78 per head Source: USMEF

35 What is the function of Traceability, Source Verification and/or Process Verification? Control animal and zoonotic diseases –Only need live animals procedures –FMD, BSE Food Safety –Chemical Antibiotics, Hormones, Pesticides GMO –Sanitary Microbiology GMP Physical Risks: Needles –Only need plant procedures Recall procedures Commercial purposes –Branded Programs Source Verification –Identity Preservation –Information Exchange Genetics Production Practices

36 Production Verification

37 Traceability and Consumer Demand Dickson and Bailey, Meat Traceability: Are US consumers willing to pay for it? 2002

38 Value Attributes Production –Genetics –Feed –Production Practices Animal Health Feed Animal Welfare Processing –Food Safety Enhancements –Quality Enhancements

39 Brands Natural Brands Store Brands Private Brands

40 Marketing Value Attributes Each of these product lines have traceable attributes. Some attributes must be traced back further in the production process. RibeyeStriploin Wal-Mart$7.48$7.68 Wal-Mart Angus$12.03$12.42 Cattlemens Collection$10.79$10.99 Ranchers Reserve$9.99$11.49 Butchers Premium Angus$12.99$11.49 Lauras Lean All Natural$11.79 Colemans Natural Meats$16.99

41 Where Do We Go From Here? Australia beef checkoff changed to $5 per head (all international) Canada has roughly $60 million to invest in overseas market development Virtually all beef competitors have traceability in one form or another Global demand is rapidly growing –Shifts in consumption and production Trade is liberalization is expanding –Bilateral agreements increasing –U.S. is committed to pursuing FTAs

42 Where Do We Go From Here? To compete globally: Focus on U.S. advantages: –Diversity, flexibility of programs, grain-fed Aggressively pursue trade and competition Embrace trade enhancing policies Export-minded mentality Promote agility and ingenuity

43 In Summary Global beef demand is expanding –Population, incomes, globalization BSE has changed the way we do business Participating in beef trade helps U.S. beef –Increase profitability of industry –Participate globally –Invest in future markets –Maintain competitiveness Non-scientific trade barriers...


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