Producers enthusiastic about foreign marketing opportunities

Beef checkoff dollars continue to be invested in foreign marketing activities to build global demand for beef and maintain beef’s positive image. And although the export train has had a steeper hill to climb and export volume has slowed as compared to this time last year, the United States is still four percent above last year’s record value, and export value for every fed steer and heifer slaughter remains above $200.

“Demand for U.S. beef remains very strong across the globe,” says Wesley Grau, chairman of the Cattleman’s Beef Board and cow/calf producer from Grady, N.M. “This has been achieved despite limited access to Japan, no access to mainland China and some ongoing market access issues in Taiwan and Indonesia. But we must overcome these current obstacles in order to maintain exports beyond our current level. All-in-all, the foreign marketing landscape is very encouraging for U.S. producers and the return we see has been great.”

Fiscal year 2011 boasted record export numbers in both volume and value and the U.S. will be very challenged to repeat that performance.

Here are some brief highlights for export markets for the remainder of the year:

Japan – The U.S. is anticipating new market access in Japan. In the wake of last year's earthquake and tsunami disasters that crippled a nuclear power plant, Japanese consumers still have concerns over the safety of domestic food products.

Korea -- Although the BSE episode created relatively little consumption impact in most of the Asian countries, in Korea it’s been quite significant. U.S. beef sales in Korea were slow in the first quarter of 2012 , and weakened further after the BSE announcement. Korea's beef herd expansion in recent years has also far outpaced demand for domestic beef, prompting the government to engage in a buyout to cull some breeding cows.  This has created a surge of Korean beef coming onto the market at lower prices. Korean beef is still the most expensive in the market, but the gap between domestic and imported beef prices has narrowed significantly - making Korean beef more enticing for consumers.

Taiwan – The challenge in this market is the issue of ractopamine – there’s zero tolerance for any meat imported with traces of it. Exports in the first quarter of the year were down 18 percent but steeper declines will be seen moving forward.

China -- The U.S. beef industry looks very much forward to getting access to China. China’s beef imports as reported by their customs are going up again – they have record-high beef prices, but there’s a beef shortage in China. The beef industry needs that market and it should be a priority for the U.S.

Russia -- Beef in Russia is performing well in the first quarter. Under the WTO agreement the country-specific quotas remain, but the U.S. government was successful in negotiating a significant increase in the beef quota for the United States to 132 million pounds this year. The U.S. looks set to fill that quota.

Middle East – The Middle East traditionally having been the major market for U.S. variety meats and beef livers is now seeing larger and larger quantities of muscle cuts and value meats moving to that area. Egypt has been the biggest demander for these products.

Europe – The U.S. has better market access now in Europe. The duty-free beef quota will be expanded on Aug. 1, 2012, from its current 44 million pounds to 106 million pounds. There is competition in this beef quota from Canada, Australia, New Zealand and Uruguay. However, financial insecurity in the EU is on the rise and it’s likely the EU will see a weaker Euro in the future.

Mexico – The Mexican peso is still relatively weak against the dollar. Beef exports have been down this year 13 percent through March – but from the peak of 873 million pounds in 2008 which was the record level, the U.S. is now down to 566 million pounds or a decline of 35 percent. Looking ahead, because of the severe drought, Mexico has increased their slaughter of beef cattle last year by about 5 percent. They increased their exports of feeder cattle to the United States by about 50 percent – they exported almost 1.9 million head of feeder cattle to the United States last year. This means in Mexico, there’s going to be less Mexican beef in the marketplace today and into the future.

Central America – Central America is a small market but it’s a dynamic market. On high-quality beef cuts and some offals, the Panamanian duty goes to zero upon implementation of the free trade agreement with Panama this fall.  

“Beef exports and growth looks good for the remainder of the year up an estimated four percent to $5.6 billion,” says Grau. “Beef export volume should remain at about 2.6 billion pounds or the same as last year. These results are valuable to the bottom line of cattle producer’s operations and that truly is a success story for our industry.”

Click here for a review of activities in all countries during the first quarter of FY 2012.

For more information about your beef checkoff investment in foreign marketing, visit MyBeefCheckoff.com.

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