Consolidated Beef Producers

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

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

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

4. 2005 Beef Import DEMAND - YTDBeef/BVM Source: Global Trade Atlas, not including intra-EU trade

5. Value of Beef Exports 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. The world’s 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. Growing Agricultural Trade

11. Global GDP and Global Red Meat Consumption 1971-2002 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 Global Consumption is outpacing U.S. production Source: FAO

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

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

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

18. World Beef Exporters 2001 Australia 17.5% Other 29.3% 2004 U.S. 15.5% New Zealand S. America 6.8% 15.8% Canada EU (Brazil, Argentina, 7.5% Uruguay) 7.5% Source: Global Trade Atlas

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

20. Global Beef Exporters by Country 1,800 1,600 1,400 1999 1,200 2000 2001 1,000 1,000 MT CWE 2002 800 2003 600 2004 (f) 400 2005 (f) 200 0 U.S. India EU-25 Brazil Others Ukraine Canada Uruguay Australia Argentina N. Zealand Competition is Fierce

21. Top 10 Beef Export Markets in Common2003

22. Beef New Zealand Australia Uruguay Canada* Argentina Brazil U.S.* Self-Sufficiency Dependence on Exports 592% 265% 257% 131% 123% 122% 98% Pork • Canada • Brazil • EU-25 • U.S. 180% 128% 106% 104% *U.S. – 2003, *Canada 2002, Others - 2004 Source: USDA/FAS PSD Tables

23. Brazil 314 million farmable acres 151 million farmed

24. U.S. / BrazilMeat Comparison

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

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 -

29. Exports Outpacing Imports

30. Avian Influenza

31. BSE LossesTop 10 Exported Cuts * Based on USDA steer / hfr slaughter Source: USDA, USMEF

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

33. Japan Beef Supplies • Eating less, yet paying more • Losers: N. America, domestic industry 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 Private Brands Store Brands

40. Marketing Value Attributes Each of these product lines have traceable attributes. Some attributes must be traced back further in the production process.

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 FTA’s

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 . . .