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EXPORT OPPORTUNITIES

EXPORT OPPORTUNITIES. WHERE TO GO AND WHAT TO AVOID. MODERATOR Janie Gabbett Executive Editor, Meatingplace. Opportunities for Exporting Beef & Pork. Erin Borror Economist for the U.S. Meat Export Federation. Longer Term Pork Export Trends.

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EXPORT OPPORTUNITIES

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  1. EXPORT OPPORTUNITIES WHERE TO GO AND WHAT TO AVOID

  2. MODERATOR Janie Gabbett Executive Editor, Meatingplace

  3. Opportunities for Exporting Beef & Pork Erin Borror Economist for the U.S. Meat Export Federation

  4. Longer Term Pork Export Trends Global exports account for a relatively steady 6% of global consumption; excluding Chinese consumption exports account for 11-12% of consumption Source: OECD/FAO Ag Outlook 2011; thousand MT carcass weight equivalent

  5. U.S. Pork & Variety Meat Exports by Market Metric Tons 2011F export value: $5.45 billion, record breaking Source: USDA/FAS and USMEF Forecast, metric tons

  6. 2010 U.S. Pork Exports Top Value Markets & Main Export Items Loins, picnics, butts, bellies, backribs, tenderloins, jowls 3 Piece & boneless hams Butts, picnics Bone-in hams and picnics Offals and small volumes of butts, loins, ribs Bone-in hams, picnics and offals Source: USDA/FAS, USMEF

  7. Top Growth Markets for U.S. Pork • China/Hong Kong • Korea • Japan • Mexico • Central/South America

  8. Major Markets: Pork & Variety Meat Imports from All Suppliers, Jan-Aug Metric Tons Million USD Japan $3.85 Billion Jan-Aug 2011 Import Value Source: GTA

  9. Per Capita GDP and Pork Consumption Many countries will rely on imported pork to support growth in per capita consumption and/or to maintain current levels EU-27 China Taiwan Taiwan Taiwan Taiwan Taiwan S. Korea S. Korea S. Korea S. Korea S. Korea U.S. Russia Canada Australia Canada Australia Canada Australia Canada Australia Red Meat Consumption Kg/Capita Japan Mexico Mexico Mexico Philippines Philippines Brazil GDP USD/capita Source: World Factbook and USDA

  10. China Pork Potential • Supply fluctuations (account for half of world’s pork production and consumption) • Soybean imports • Corn prices • Import trends to date • Domestic production and market access are the big variables, including disease issues /subsidies/corn prices/etc and • market access issues like ractopamine

  11. Short Term Pork Production Change in Metric Tons World 2011: -1.62 MMT 2012F: +2.3 MMT China 2011: -1.57 MMT 2012F: +1.78 MMT Source: USDA/FAS Fall PS&D, Carcass weight equivalent

  12. Growing Correlation Between U.S. Exports to China & U.S. Pork Prices Metric Tons $/cwt Source: USDA/ERS and FAS

  13. Korea Pork Potential • FMD, how much will the industry recover • Per capita consumption growth potential • Elimination of duties • U.S. market share of total pork consumption and imported pork • The growing chilled market—competing with domestic • Processing sector switch to U.S. frozen pork after FMD • EU specifications for single ribbed belly

  14. Korea Hog Industry Outlook

  15. Korea Pork Import Status 2011 est: total imports up 80% to 545,000 MT 2011est Source: Global Trade Atlas

  16. Korea Tariff Reduction for Key Frozen Items

  17. Korea Tariff Reduction for Key Chilled Items

  18. Chilled U.S. Pork at Korean Retail

  19. Japan Pork Potential • U.S. dominant market share of imported pork • Domestic production slow decline • Per capita consumption relatively steady • Unlikely change in gate price system without a DDA agreement or without Japan’s participation in TPP • U.S. advantage in supplying chilled high value cuts • U.S. advantage in supplying chilled and frozen cuts for processing

  20. Japan Pork Situation Source: USDA/FAS Fall PS&D, Carcass weight equivalent

  21. Japan’s Pork Imports U.S. pork exports to Japan have more than doubled in value since 2003; reaching $1.646 Billion in 2010 and expected to set another record this year. Japan’s total imports are relatively flat but the U.S. has gained market share. Source: Global Trade Atlas

  22. Mexico Pork Potential • Duty-free and proximal market • U.S. dominates Mexico’s pork imports • Domestic production continues to grow but pending transition to larger commercial producers and subject to corn prices • Imports also grow with U.S. as dominant supplier • Per capita consumption grows slowly + population growth • Continued need for U.S. bone-in hams • Price (and currency) sensitive

  23. Mexico Pork Situation Source: USDA/FAS Fall PS&D, Carcass weight equivalent

  24. Central/South America • Diverse region • Free trade agreements • Income growth • Imports also grow with U.S. as dominant supplier • Per capita consumption grows with income & population • Some markets are relatively small but opportunities for the niche suppliers

  25. Top Exporters: Beef & Variety Meat Export Status U.S. was the largest beef & variety meat exporter in Jan-Sept 2011! Data for Jan-August exports: • U.S. 857,680 MT, +26% • Australia 728,073 MT, +1% • Brazil 671,996 MT, -19% • India ??? likely >390,000 MT • Depending on Egypt ban, etc (export data only available through March) • New Zealand 301,447 MT, -5% • EU-27 295,359 MT, +110% • Turkey and Russia • Canada 224,808 MT, -21% • Uruguay 165,248 MT, -15% • Argentina 164,048 MT, -11% • Paraguay 139,189 MT, -13% Source: Global Trade Atlas

  26. Major Markets: Import Status 2011 Beef & Beef Variety Meat Import Status January through Aug 2011 unless otherwise noted (yr/yr change) U.S. 500,767 MT, -15% Russia 493,011 MT, +11.5% Middle East Jan-June ~465,330 MT, -2% depending on India’s exports and excluding Iran Japan 373,787 MT, +6% Hong Kong 255,979 MT,+4.5% Greater China ~310,900 MT, +8% depending on India Korea 228,039 MT, +20% EU-27 166,700 MT, -17% Mexico 145,446 MT, -12% *Jan-July Canada 142,685 MT, +18% Iran 106,220 MT, -6% Turkey 91,023 MT Chile 80,309 MT, -6% Taiwan 65,440 MT, -5% Source: Global Trade Atlas Source: GTA

  27. U.S. Beef Exports to Top Markets 2011 Exports expected to surpass $5 billion for first time ever, with exports to Japan & Korea still lagging 2003 Source: USDA/USMEF Fall 2011 Forecast, includes variety meats

  28. Per Capita GDP and Beef Consumption Countries where growth in consumption will come from growth in imports U.S. Australia Canada Brazil Red Meat Consumption Kg/Capita Mexico EU-27 Russia S. Korea Japan China Taiwan GDP USD/capita Source: World Factbook and OECD/FAO; GDP USD/capita

  29. Beef Outlook Largest Potential Growth Markets • Japan • Korea • China • Middle East • Mexico

  30. Japan Beef Potential • U.S. market share of imported beef, back to dominant position of pre-BSE • Per capita consumption recover to pre-BSE level • Domestic production slow decline • Potential change in the current LT21 months age limit • Preference for U.S. grain-fed, including high Choice • Takes large volumes of “Asia cuts” including short plate • No change in duties likely without Doha or TPP agreement (38.5 percent ad valorem plus risk of triggering safeguard)

  31. Japan Beef Situation Source: USDA/FAS Fall PS&D, Carcass weight equivalent

  32. Japan’s Beef Imports 2011 total imports estimated +5% to 581,000 MT Source: Global Trade Atlas

  33. Korea Beef Potential • U.S. market share of imported beef, back to dominant position of pre-BSE • Demand for U.S. grain-fed, especially certain mix of Asian cuts but USMEF working to build demand for more cuts • Per capita consumption recover to pre-BSE level with further expansion possible • Elimination of duties through KORUS, from 40% to zero over 15 years • Slow decline in domestic production

  34. Korea’s Beef Situation Source: USDA/FAS Fall PS&D, Carcass weight equivalent

  35. Korea’s Beef Imports 2011 total imports estimated +24% to 361,500 MT Source: Global Trade Atlas

  36. China Beef Potential • Once the U.S. regains access, assume tremendous growth potential (some diversion of current exports) • Rampant foodservice growth • Lack of domestic production, especially of high quality beef • High prices indicate tight supplies • U.S. ability to supply specific high quality cuts in large, consistent volumes • Expect demand to build for a wide array of cuts and offals • Middle class population and urbanization • GDP growth • Cold chain & infrastructure development • Slowly appreciating currency • Low per capita consumption compared to pork and poultry

  37. China Challenges • Duties + VAT = 27% • De facto import licensing (AQSIQ) • Quota management (MOFCOM’s ARF) • Excessive labeling requirements • Opaque port inspection procedures • Potential plant-by-plant registrations • Undervalued currency • Sanitary barriers • BSE related beef ban • Ractopamine & beta agonist ban • plus hormone ban on the books for beef • Zero tolerance for pathogens on fresh/frozen raw meat

  38. Beef Exports to China/Hong Kong/Vietnam, January-August Source: Global Trade Atlas

  39. Middle East Beef Potential • High income growth; business travelers • Beef fits religious requirements (halal can have challenges) • Generally good U.S. access to the region • Range of products from offals to muscle cuts for processing to HQB • U.S. competitive supplier of certain cuts and growing demand for high quality • General lack of domestic production • Foodservice growth and cold chain development • Continue as large offal market (Egypt) • Region as a whole is already top beef importer

  40. Mexico Beef Potential • Growing consumption and production over longer-term • Domestic production will depend on drought and feed prices • NAFTA= favorable access; U.S. dominates Mexico’s beef imports • Price is a challenge but preference for beef • Beef round demand to supplement domestic • Live cattle exports to U.S.

  41. Mexico’s Beef Situation Source: USDA/FAS Fall PS&D, Carcass weight equivalent

  42. Mexico Dynamics • Mexican feeder cattle exports to U.S. up 21% to 994,027 head (Jan-Oct 22) • Imports of beef from Mexico also on a record pace at 40,790 mt through August, up 60% • Now the fourth-largest supplier to U.S. after Canada, New Zealand & Australia, with 8% market share • Mexico is shipping mostly chilled middle meats to the U.S. • Cow inventory & calf crop relatively steady ~expansion not expected Thousand Head Source: USDA/FAS Fall PS&D Source: USDA/FAS Fall PS&D, Carcass weight equivalent

  43. The Beef Challenge, Similar to U.S. Scenario Mexico’s Per Capita Consumption Source: USDA/FAS Fall PS&D, Carcass weight equivalent

  44. Other Points What about Russia?? • Likely to be another continued significantly important market…WTO accession and participation in the rules-based trading system will partially determine the future for U.S. red meat exports The Faux Medium-Term Potential Boom Market for U.S. Red Meat • India • Barriers to entry • Lack of cold chain • Incredibly high duties • Religious challenges • Highly fragmented market • Etc

  45. Opportunities for Exporting Poultry Jim Sumner, President USA Poultry and Egg Export Council International Poultry Council

  46. Opportunities for Exporting Poultry Topics in today’s presentation: USAPEEC and its mission An overview of U.S. poultry exports Challenges facing U.S. poultry exports Opportunities for U.S. poultry export growth Conclusions

  47. USAPEEC and its mission

  48. USAPEEC Locations Mexico City Monterrey Hong Kong Singapore Moscow Beijing Central Asia Shanghai Tokyo Seoul Middle East South Africa Europe Based in Stone Mountain, Georgia, USAPEEC has 13 international offices in major export markets:

  49. USAPEEC Membership

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