NPB International Trade Update Becca Hendricks, VP International Marketing

US Pork in a Big World 96% of the world population lives outside of the US …and pork is the world’s most consumed animal protein 2050: 9 billion people, 60-70% more food Over the next decade, increases in meat consumption: – 2.4% in developing countries – 0.9% in developed countries US pork must (and can) remain a key global competitor

2015 Areas of Investment Marketing and promotion Market research Market intelligence New product development Marketing and promotion Market research Market intelligence New product development

Export Goal By 2020, increase pork exports through access to new markets and expansion of existing markets, and achieve an increase of 2.7 billion pounds and $3.1 billion, or 9% average annual increase in value and quantity compared to 2014 year-end data.

Our Export Roadmap Implement an integrated plan for access & promotion Define aggressive market access actions Identify new market development opportunities Clarify strategies and tactics, and develop loyalty in existing markets Provide the products desired by customers

Year-to-Date 2014 Exports $4.003 B, ↑16%, B lbs, ↑7% The first year that value has exceeded $4B before August In July: Volume ↓3% (first month in 2014) Value ↑14% Value at $64.45/head, 28% of production Record pace despite prices and intense global competition High prices for domestic pork in many countries Market closures, changing trade flows…

Russia Situation Feb 2013: Russia suspended imports of US beef and pork, due to beta- agonist policy Feb 2014: Began allowing US pork produced under USDA AMS Never- Fed Beta Agonists program, approved 2 plants June 2014: Exports reached 9,371 MT (98,830 MT in 2012) Putin decree of a “ban or restriction” on ag imports from countries that have imposed sanctions, including US, EU, Canada, Norway, Australia What this means: Russian reductions in supplies Beef: -8% Pork and Poultry: -12% Displaces 16% of Canada’s exports or 68% of their production Brazil/South America and China(!) will likely be able to supply portion of banned poultry losses…pork? China and Russia bans WILL shift global pork flows

Top US Export Markets: Jan-July 2014 Mexico M, ↑12% Japan 644.3, ↑16% China/HK 473.8, ↓10% Canada 262.4, ↓10% Korea 183.3, ↑31% C/S Am 149.9, ↑8% ASEAN 94.5, ↑13% Oceania 90.5, ↑8% Japan $1.208 B, ↑9% Mexico $887.1 M, ↑38% China/HK $474.4, ↓ 7% Canada $509.4, ↑ 5% Korea $257.5, ↑49% C/S Am $187.6,↑20% Oceania $141.9, ↑18% ASEAN $113.4, ↑24% Volume (Million Pounds) Value (Million $) Source: USDA statistics compiled by USMEF, compared to 2013

Mexico: Jan-July 2014 Volume (Million Pounds) Value (Million $) Source: USDA statistics compiled by USMEF, compared to 2013 Mexico M, ↑12% Japan 644.3, ↑16% China/HK 473.8, ↓10% Canada 262.4, ↓10% Korea 183.3, ↑31% C/S Am 149.9, ↑8% ASEAN 94.5, ↑13% Oceania 90.5, ↑8% Japan $1.208 B, ↑9% Mexico $887.1 M, ↑38% China/HK $474.4, ↓ 7% Canada $509.4, ↑ 5% Korea $257.5, ↑49% C/S Am $187.6,↑20% Oceania $141.9, ↑18% ASEAN $113.4, ↑24% Textbook story… Exporting to Asia Propelled ham value but now looking for them to consume Canada and US hams Textbook story… Exporting to Asia Propelled ham value but now looking for them to consume Canada and US hams

Japan: Jan-July 2014 Volume (Million Pounds) Value (Million $) Source: USDA statistics compiled by USMEF, compared to 2013 Mexico M, ↑12% Japan 644.3, ↑16% China/HK 473.8, ↓10% Canada 262.4, ↓10% Korea 183.3, ↑31% C/S Am 149.9, ↑8% ASEAN 94.5, ↑13% Oceania 90.5, ↑8% Japan $1.208 B, ↑9% Mexico $887.1 M, ↑38% China/HK $474.4, ↓ 7% Canada $509.4, ↑ 5% Korea $257.5, ↑49% C/S Am $187.6,↑20% Oceania $141.9, ↑18% ASEAN $113.4, ↑24% 5% production decrease Stagnant demand FTA’s with Aust, Mex, Chile 5% production decrease Stagnant demand FTA’s with Aust, Mex, Chile

China: Jan-July 2014 Volume (Million Pounds) Value (Million $) Source: USDA statistics compiled by USMEF, compared to 2013 Mexico M, ↑12% Japan 644.3, ↑16% China/HK 473.8, ↓10% Canada 262.4, ↓10% Korea 183.3, ↑31% C/S Am 149.9, ↑8% ASEAN 94.5, ↑13% Oceania 90.5, ↑8% Japan $1.208 B, ↑9% Mexico $887.1 M, ↑38% China/HK $474.4, ↓ 7% Canada $509.4, ↑ 5% Korea $257.5, ↑49% C/S Am $187.6,↑20% Oceania $141.9, ↑18% ASEAN $113.4, ↑24% Racto testing gives EU advantage Recent delistings Reduced variety meat exports Surge in muscle meat exports Took first chilled imports in March Racto testing gives EU advantage Recent delistings Reduced variety meat exports Surge in muscle meat exports Took first chilled imports in March

Canada: Jan-July 2014 Volume (Million Pounds) Value (Million $) Source: USDA statistics compiled by USMEF, compared to 2013 Mexico M, ↑12% Japan 644.3, ↑16% China/HK 473.8, ↓10% Canada 262.4, ↓10% Korea 183.3, ↑31% C/S Am 149.9, ↑8% ASEAN 94.5, ↑13% Oceania 90.5, ↑8% Japan $1.208 B, ↑9% Mexico $887.1 M, ↑38% China/HK $474.4, ↓ 7% Canada $509.4, ↑ 5% Korea $257.5, ↑49% C/S Am $187.6,↑20% Oceania $141.9, ↑18% ASEAN $113.4, ↑24% PEDv challenges US has 30% share of domestic consumption Russia closure = 16% of exports and 68% of production Global shift of markets PEDv challenges US has 30% share of domestic consumption Russia closure = 16% of exports and 68% of production Global shift of markets

South Korea: Jan-July 2014 Volume (Million Pounds) Value (Million $) Source: USDA statistics compiled by USMEF, compared to 2013 Mexico M, ↑12% Japan 644.3, ↑16% China/HK 473.8, ↓10% Canada 262.4, ↓10% Korea 183.3, ↑31% C/S Am 149.9, ↑8% ASEAN 94.5, ↑13% Oceania 90.5, ↑8% Japan $1.208 B, ↑9% Mexico $887.1 M, ↑38% China/HK $474.4, ↓ 7% Canada $509.4, ↑ 5% Korea $257.5, ↑49% C/S Am $187.6,↑20% Oceania $141.9, ↑18% ASEAN $113.4, ↑24% Imports recovering, US has dominant share PEDv challenges, now FMD Highest production costs Greater access in 2016 Imports recovering, US has dominant share PEDv challenges, now FMD Highest production costs Greater access in 2016

C/S America: Jan-July 2014 Volume (Million Pounds) Value (Million $) Source: USDA statistics compiled by USMEF, compared to 2013 Mexico M, ↑12% Japan 644.3, ↑16% China/HK 473.8, ↓10% Canada 262.4, ↓10% Korea 183.3, ↑31% C/S Am 149.9, ↑8% ASEAN 94.5, ↑13% Oceania 90.5, ↑8% Japan $1.208 B, ↑9% Mexico $887.1 M, ↑38% China/HK $474.4, ↓ 7% Canada $509.4, ↑ 5% Korea $257.5, ↑49% C/S Am $187.6,↑20% Oceania $141.9, ↑18% ASEAN $113.4, ↑24% Increasing GDP’s, populations Colombia eliminated trichinae restrictions, up 72%, no #7 Increasing chilled exports to Colombia, Peru, CAFTA/DR Increasing GDP’s, populations Colombia eliminated trichinae restrictions, up 72%, no #7 Increasing chilled exports to Colombia, Peru, CAFTA/DR

ASEAN: Jan-July 2014 Volume (Million Pounds) Value (Million $) Source: USDA statistics compiled by USMEF, compared to 2013 Mexico M, ↑12% Japan 644.3, ↑16% China/HK 473.8, ↓10% Canada 262.4, ↓10% Korea 183.3, ↑31% C/S Am 149.9, ↑8% ASEAN 94.5, ↑13% Oceania 90.5, ↑8% Japan $1.208 B, ↑9% Mexico $887.1 M, ↑38% China/HK $474.4, ↓ 7% Canada $509.4, ↑ 5% Korea $257.5, ↑49% C/S Am $187.6,↑20% Oceania $141.9, ↑18% ASEAN $113.4, ↑24% Philippines and Singapore #9 and 10 Singapore ↑182!...gray trade with China Philippines down, outlet for EU product White offal access to Vietnam Philippines and Singapore #9 and 10 Singapore ↑182!...gray trade with China Philippines down, outlet for EU product White offal access to Vietnam

Oceania: Jan-July 2014 Volume (Million Pounds) Value (Million $) Source: USDA statistics compiled by USMEF, compared to 2013 Mexico M, ↑12% Japan 644.3, ↑16% China/HK 473.8, ↓10% Canada 262.4, ↓10% Korea 183.3, ↑31% C/S Am 149.9, ↑8% ASEAN 94.5, ↑13% Oceania 90.5, ↑8% Japan $1.208 B, ↑9% Mexico $887.1 M, ↑38% China/HK $474.4, ↓ 7% Canada $509.4, ↑ 5% Korea $257.5, ↑49% C/S Am $187.6,↑20% Oceania $141.9, ↑18% ASEAN $113.4, ↑24% New access for chilled pork in NZ, less than 3 kg PR issues in both countries New access for chilled pork in NZ, less than 3 kg PR issues in both countries

Opportunities Trans-Pacific Partnership of 12 Nations – Sticking point: Japan access/elimination of gate price – Other nation support for US position – Next round: October Transatlantic Trade Investment Partnership with EU – EU willing to eliminate tariffs on nearly all goods – Unwilling to eliminate them on beef, poultry and pork – Huge SPS and social issues – Precautionary Principle Both have HUGE potential NPB research on barriers, cost of restrictions

Forecast Forecast up 1.5-2% in 2014? – Prices dropping – Rising demand from Japan, Korea, Mexico – EU gaining share in competitive markets – WATCH: Global product flow shifts

International Marketing Research

Marketing Structure Study Is our current structure working? Are we targeting the right markets? Are our tactics the right ones? What are the best opportunities? How do we get there? How do we achieve our goal? Identify data gaps Conduct interviews Prioritize markets Develop scorecards Clear definition of optimal structure Clear identification of constraints Recommendations for structure Pathways

“By-Product” Research

Exported Muscle Cuts

Exported By-Products & Variety Meats

Variety Meat Research Projects An evaluation of the suitability of porcine lung tissue for human consumption CSU Aseptically packaged pork products preserved by Advanced Thermal Processing - feasibility study NCSU Extending the shelf life of livers, lungs, kidneys, and hearts ISU Enhanced safety and shelf life of US pork organ meats destined for international trade WPF

International Resources

US Pork Videos Nutrition Processing and Fabrication Animal Care Sustainability and Environment

By-Product Recipe Book

Thank You!

MCOOL WTO ruled against US…waiting on next outcome Fix after November elections? If lose the appeal, Canada and Mexico can estimate/calculate "damages" and impose punitive duties Likely in 2015