USMEF General Session

1. USMEF General Session U.S. Meat Export Federation

2. Europe, Russia & Middle East RegionJackie HrubyDirector

3. The Europe, Russia & Middle East Region • Europe Region • EU • Eastern Europe • Russia Region • Russian Federation • Confederation of Independent States (CIS) • Middle East Region • Egypt • Saudi Arabia • UAE

4. Importance of the Region & its Markets to U.S. Pork & Beef Trade • All markets in the region are significant net importers of red meats with limited or declining domestic production • There is good potential to enhance access for both US beef and US pork to the large and high-value EU market • There is significant potential for the continued growth of US pork exports to Russia • The region accounted for 19% of total US beef and beef variety meat exports, and 32% of US beef variety meat exports in 2004 • Russia and the Middle East are a significant outlet for US beef variety meats, and growing markets for high-value products

5. Demographics • Europe • Continued expansion of the EU to 27 countries by January 1, 2007 (including Bulgaria and Romania) • A number of markets are further away from EU integration, and there may well be opportunities to develop exports to: • Bosnia, Kosovo, Macedonia and Serbia • Largest of these is Serbia, with a population of over 10 million • Russia • Total population of 141.5 million • Aging population with negative birth rate

6. Demographics • Middle East • High rates of population and per capita income growth • Average population growth rate of 3% • Population of Egypt increases by 1 million every 10 months • Regional population of 325 million (including Iran, Turkey and Israel) • 190 million in Egypt, the Gulf States, Iraq and the Levant

7. Economic Situation • European Union (EU) • High per capita incomes in the EU-25, although incomes are lower in the 10 New Member States: • $28,030 - $15,910 in EU-15 • $17,980 - $9,610 in EU-10 • Russia • High oil revenues continue to drive growth • Middle East • Real GDP growth of 4.3% • Per capita incomes range from $4,200 in Egypt to $24,800 in the UAE

8. Political Climate • European Union (EU) • Continued integration a key challenge following enlargement • Impasse over the EU’s Constitution following its rejection by France earlier this year • Russia • President Putin continues to maintain strong control, and reform is slow • Middle East • Continued instability in the region, with Syria the latest flash-point • Egypt experienced its first free presidential elections in September 2005

9. Trade Policy & Market Access Environment • European Union (EU) • The EU is willing to consider resolving outstanding disputes and normalizing trade • Some access for both US beef and US pork under existing quotas: • US Hilton Beef Quota - 11,500 tons • GATT quota for boneless pork hams and loins - 34,000 tons • Russia • Russia is keen to complete negotiations and join the WTO • Currently Tariff Rate Quotas allow for good access • Middle East • Increasing numbers of FTAs are either being negotiated or are close to being finalized • Good potential to enhance access for beef variety meats to Egypt

10. Competitive Environment • European Union (EU) • Principal suppliers of beef to the EU-25 are Brazil and Argentina • There are few third-country suppliers of pork to the EU, therefore the competition is intra-EU • Key consumer trends • convenience, innovation and indulgence • Comparative advantages • The US pork industry is ideally suited to addressing the needs of large scale European processors • US beef is able to provide diners across Europe with an exceptional eating experience • The size, scale and variety of the US red meat industry can provide a supply of innovative products to the HRI and Retail sectors

11. Competitive Environment • Russia • The principal supplier of pork to Russia is Brazil • South American suppliers such as Argentina and Brazil have taken over from European suppliers and the Ukraine as the main suppliers of beef • Key consumer trends • value, convenience and taste • Comparative advantages • US pork industry offers well-priced products to meet the needs of the processing sector • The US industry provides consumers with a variety of easy to cook and tasty products • US beef and US pork offer Russian diners excellent eating quality

12. Competitive Environment • Middle East • Australia has made significant headway in premium positioning its beef in the absence of US beef • Argentina and Brazil provide the value alternative • Indian buffalo meat continues to dominate the lower priced segments of the market • Key consumer trends • health, nutrition and taste • Comparative advantages • Uniqueness of beef grading and cutting • US beef provides consumers with healthy, nutritious and tasty meal solutions

13. Europe

14. General Market Situation • Romania has become the seventh largest export market for US pork • The US is the largest third country pork supplier to the EU • All markets are open for US beef with the exception of Romania • South American producers such as Brazil and Argentina are the key competitors in the beef sector

15. Market Priorities and/or Areas for Greatest Growth for U.S. Pork U.S. Pork Export Forecast Metric Tons (1,000’s) • Pig production in the 10 NMS is largely fragmented and is unable to supply significant volumes of consistent product to the EU’s large processing sector • Consumers are looking for innovative and ‘different’ food products • Access for the US pork industry is improving, as additional plants gain EU approval and negotiations continue to lessen restrictions

16. Market Priorities and/or Areas for Greatest Growth for U.S. Beef U.S. Beef Export Forecast Metric Tons (1,000’s) • The EU’s beef deficit continues to grow, and is currently forecast at 530,000 tons • There is a willingness on the part of the EU to lessen restrictions on exports of US beef • The growing HRI sector is actively seeking consistent supplies of US grain-fed beef • Beef consumption in the NMS is forecast to increase as these economies continue to grow and develop

17. Russia

18. General Market Situation • TRQ System • Favorable US pork and beef quota allocation 2005 through 2009 • During the first 8 months of 2005 US pork exports to Russia increased by 130%, and exports of PVM by 362% • The market is currently closed for US beef and BVM • US beef will be able to regain its pre-BSE market share within 6 months of the ban being lifted

19. Market Priorities and/or Areas for Greatest Growth for U.S. Pork U.S. Pork Export Forecast Metric Tons (1,000’s) • Favorable quota allocation gives good potential for growth of US pork exports to Russia • The improving economy expands opportunities for US enhanced pork in the HRI sector • Demand for high-quality US pork exists in the growing retail sector

20. Market Priorities and/or Areas for Greatest Growth for U.S. Beef U.S. Beef Export Forecast Metric Tons (1,000’s) • The trade are waiting for the ban to be lifted • No replacement for quantity and quality of US beef variety meats • US high quality beef will quickly regain its premium niche in the HRI sector

21. Middle East

22. General Market Situation • Middle East Countries have re-opened to US beef • Middle East Region ranked as 5th largest overseas market • Enhanced recognition & awareness of US beef safety and quality due to : → Successful USMEF US beef relaunch → Supported by full fledged activity mix • US high quality beef is back on menus • New market segments are opening up for US beef liver in Egypt

23. Relaunch of US Beef

24. Market Priorities and/or Areas for Greatest Growth for U.S. Beef Expansion Markets Egypt :Beef Livers →Wet Market → Retail → HRI High Quality Beef → HRI & Retail Beef Kidneys & Hearts Premium Markets Saudi Arabia & UAE remain primary markets for HQ & processed beef products Potential Growth Markets Kuwait being a major storage and supply route to Iraq presents a potential growth market for US HQ & processed beef products U.S. Beef & Beef Variety Meat Export Forecasts (Metric Tons)