International Markets Update

1. International MarketsUpdate Lynn HeinzeVice President, InformationU.S. Meat Export Federation Putting U.S. Meat On The World’s Table

2. USMEF Worldwide Putting U.S. Meat On The World’s Table St. Petersburg London Denver Moscow Tokyo Seoul Monterrey Beirut Mexico City Shanghai Guangzhou Taipei Hong Kong Singapore Putting U.S. Meat On The World’s Table

3. Int’l Staff “Makes it Happen”

4. USMEF Snapshot • Public-private sector cooperation • Multi-species – beef, pork, lamb • Multi-segment • Grain/livestock checkoffs/producer groups • Packers/processors/purveyors/traders • Agribusiness • Strategies: • Gain market access; maintain market presence • Educate buyers; build loyalty • Support trade • Promote industry/product image • Educate consumers regarding food safety • Utilize the total carcass Putting U.S. Meat On The World’s Table

5. Leveraged Checkoff Dollars $6.3 Million Beef Checkoff Investment Buys … $15.5 Million In Beef Foreign Marketing Based on FY’06 Estimates Putting U.S. Meat On The World’s Table

6. Global Beef Outlook Source: OECD/FAO Estimates

7. Global Beef Outlook Source: OECD/FAO Estimates

8. Global Beef Outlook Source: OECD/FAO Estimates

9. Current Status U.S. Beef & BVM Exports (1,000 mt) • 133 countries imported U.S. beef in 2003/prior; 72 instituted bans in December 2003 • 22 markets currently ‘closed’ to U.S. beef • Of those reopened, access is usually limited • Six markets accounted for 90% of ’03 exports; two of these remain ‘closed’ * Putting U.S. Meat On The World’s Table • Through Oct. ’06

10. Middle East Putting U.S. Meat On The World’s Table

11. Europe Putting U.S. Meat On The World’s Table

12. Mexico Putting U.S. Meat On The World’s Table

13. Central/South America

14. ASEAN Chef training, seminars,trade shows

15. Taiwan Putting U.S. Meat On The World’s Table

16. Hong Kong

17. Japan Open! “We Care” Theme Putting U.S. Meat On The World’s Table

18. Value To Producers Through October 2006, U.S. exported: • 539,323 mt beef/bvm (+44%) • Worth $1.67 billion (+58%) $95 per head in export premiums have been regained -Cattle-Fax, August, 2006 Putting U.S. Meat On The World’s Table

19. USMEF Beef Export Forecast Source: USDA/USMEF Putting U.S. Meat On The World’s Table

20. Obstacles Remain • Bone chips continue to be an issue • S. Korea open since September, but – • China – declared ‘open’ but technical discussions/terms still undetermined • Russia – new deal being implemented • Full access: • Variety meat usually still banned under most agreements • Bone-in exports very limited • Source/age verification

21. Bone Chips • “Commercial Issue” until it’s part of trade agreement • “Boneless” means “no bone” period • Product loss, plant delistment, red tape, other trade impediments Putting U.S. Meat On The World’s Table

22. Korea • “Open” • But no trade yet: • Bone chips • Inspection protocols • GOK moving target • Importers, customers anxious to buy • Consumers ready (although activists see opportunity for ink)

23. Korea

24. China • Tough negotiators • Never one issue • Never stop negotiating until deadline • Must have full lifting; dual market offal/variety meat, premium cuts Putting U.S. Meat On The World’s Table

25. Russia • Deal struck; trade by spring • All products from <30 months of age • Will abide by OIE guidelines when U.S. risk is set • Dual market: • Low-cost, primarily variety meat • Premium cuts for high-end restaurants Putting U.S. Meat On The World’s Table

26. Full Access • Variety meats amounted to a third of total beef exports in ’03 • Tongue, kidney, heart, intestine, etc. • Small market here; unlimited there • Over 30 months of age • OIE: beef from cattle of all ages • Bone-in product • OIE: bone-in product, except vertebral Putting U.S. Meat On The World’s Table

27. U.S. OIE ‘Package’ • Submitted in October • Committee review (completed March) • OIE vote (expected in May) • Controlled risk the likely status: • Meat, bone-in/boneless, all animals with SRMs removed • Will trading partners recognize science? Putting U.S. Meat On The World’s Table

28. Stores Set Standards • Build on gov’t‘minimums’ • Set achievablestandards • Expect suppliersto meet or exceed these • Grow confidence Putting U.S. Meat On The World’s Table

29. Product Verification • U.S. premiums? • $25-$35 reportedly being paid now • Will these go up? • Value to customer of supply verification? • Will product verification become norm? • Your competition is doing it • Brazil, Argentina, Uruguay, Australia, Canada … • U.S. producers/producer organizations Putting U.S. Meat On The World’s Table

30. Imagine … Data Data Putting U.S. Meat On The World’s Table Source: Optibrand

31. Still Left On The Table Pre-BSE premium as direct result of beef exports was $170-175 per head $75-80 per head remains to be regained -Cattle-Fax, August, 2006 Putting U.S. Meat On The World’s Table

32. USMEF Market Expo Putting U.S. Meat On The World’s Table

33. www.usmef.org For additional information: lheinze@usmef.org Putting U.S. Meat On The World’s Table