By: Philip Seng with Joe Schuele Issue: Global Trade Section: Jewel Of Collaboration
Building Global Markets for U.S. Pork and Beef
It began with a team of livestock producers visiting Osaka, Japan, for a food exhibition in 1970. Today, the U.S. Meat Export Federation (USMEF) is a well-established, non-profit trade association with offices in Seoul, Tokyo, Beijing, Hong Kong, Shanghai, Singapore, Taipei, Moscow, St. Petersburg, Brussels, Mexico City and Monterrey, in addition to its global headquarters in Denver, Colo. USMEF also has marketing representatives covering the Middle East, Central and South America and the Caribbean.
“What these producers found was that beef prices were astronomically higher in Japan than in the United States, and they felt this market could hold great potential for U.S. agriculture,” said USMEF President and CEO Philip Seng. “So shortly thereafter, leadership from the beef and pork industries, as well as the meat processing sector, decided to form an association that was totally focused on international markets and would be steeped in the language, customs and food culture of these foreign countries.”
Seng said U.S. grain farmers were already finding success in global markets, exporting bulk commodities in growing quantities. That gave farmers and ranchers confidence that value-added products like pork and beef could also deliver positive returns in overseas markets.
Officially formed in 1976, USMEF is now well into its fourth decade of developing international markets for U.S. pork, beef, lamb and veal, adding value to a diverse range of U.S. agricultural products. USMEF receives funding and support from the beef, pork, corn and soybean producers through their commodity checkoff programs, as well as from meat processors, exporters and distributors, and the U.S. Department of Agriculture.
After working in Tokyo for a leading Japanese company, Seng joined the organization as director of USMEF-Japan in 1982. At that time, Europe was the primary target of USMEF’s marketing efforts.
“Back then, USEMF had offices in London and Hamburg, in addition to the one in Tokyo,” he said. “It was my role to expand the Asian operation beyond Japan, and I learned early on that if you are going to be a factor in these markets, you need to have a presence there. We took that step by opening offices in Singapore, Hong Kong, Taiwan, Korea and China.”
USMEF’s Asian expansion was well-timed, receiving assistance from the Targeted Export Assistance (TEA) program passed by Congress in 1985. The Beef Checkoff and Pork Checkoff programs were also established as part of the 1985 Farm Bill, giving the nation’s livestock producers an avenue by which they could promote beef and pork in both domestic and international markets.
“At a time when most livestock producers were concerned about imports making their way into the United States, we were working aggressively to open new markets and build international demand for U.S. meat,” Seng said.
“Thanks to that foresight, those markets are now paying excellent dividends for U.S. agriculture.” At a time when most livestock producers were concerned about imports making their way into the United States, we were working aggressively to open new markets and build international demand for U.S. meat,”
After augmenting the presence of USMEF in Asia, Seng was promoted to president and CEO in 1990. As his responsibilities grew beyond Asia to cover the entire globe, he quickly saw that the next great opportunity for expanding U.S. meat exports was right in America’s backyard.
“We opened an office in Mexico City several years before the NAFTA accord, doing the preparatory work so that once this market became more favorable, we would be able to take advantage of those opportunities,” he explained.
To say that Mexico has helped expand international opportunities for beef and pork would be a vast understatement. Mexico is consistently the largest market for U.S. beef exports, importing a record $1.4 billion last year. It was the third-largest market for U.S. pork last year, totaling $691 million.
In the first quarter of 2009, Mexico has the distinction of being the No. 1 volume destination for both U.S. beef and pork.
“Mexico was the first market to reopen to U.S. beef following the discovery of BSE (bovine spongiform encephalopathy) in 2003,” Seng said. “Since that time it has been the pacesetter for our beef exports, and has been an outstanding market for pork as well. We export a tremendous volume of variety meats and underutilized muscle cuts - such as hams and beef rounds - to Mexico that would be very hard to absorb in the domestic market. So this is an extremely valuable market, and NAFTA helped pave the way for that success by making our products more accessible and affordable.”
Canada also represents an important market for U.S. beef and pork, ranking second last year in imports of U.S. beef ($716 million) and fourth in pork ($558 million). Seng explained that while Canada produces more than enough beef and pork for its 33 million residents, many U.S. products are still in demand north of the border.
“What we find in Canada is that distributors and suppliers have certain product needs that cannot be fulfilled on a year-round basis with domestic beef and pork,” he said. “So they turn to the U.S. to meet this demand. This is especially true when the Canadian dollar is relatively strong – as was the case in 2007 and for much of 2008.”
USMEF is also finding success in other Western Hemisphere markets. The Caribbean region increased its imports of U.S. pork by 58 percent last year (to $71 million) and its imports of U.S. beef by 14 percent (to $69 million). The region is also the largest value destination for U.S. lamb, with about half of last year’s $25 million in U.S. lamb exports being shipped there. Central and South America also registered solid increases in imports of U.S. meat last year.
‘These are markets in which trade conditions are becoming more favorable, and many of these countries are growing in both population and discretionary income,” Seng said. “So they hold excellent potential for U.S. products.”
While large, mainstay markets command most of USMEF’s marketing resources, the federation is constantly working to expand and diversify the global presence of U.S. meat. This has proven to be extremely important this year, as some large markets have pulled back on their level of activity. China and Russia, for example, were two of the top four markets for U.S. pork last year. But both countries have been making a concerted effort to bolster their domestic pork production and reduce their reliance on imports. This has caused them to slash imports of U.S. pork by about 75 percent compared to the first quarter of 2008. Yet U.S. pork has still managed to grow its total exports by expanding in emerging markets such as Taiwan, the Philippines, the Dominican Republic and Australia.
“As a pork producer, it is very gratifying to see that U.S. pork has established such a strong global presence,” said Jon Caspers, an Iowa hog producer who currently chairs the USMEF board of directors.
“We know that interruptions will occur in certain markets – that’s the nature of international trade. But we are able to weather those obstacles by reaching such a wide range of markets across the world.”
Caspers is one of the volunteer leaders who chart the course for USMEF. He is joined on this year’s USMEF officer team by Chairman-Elect Jim Peterson, a Montana cattle producer; Vice Chairman Keith Miller, a farmer-stockman from Kansas; and Secretary-Treasurer Danita Rodibaugh, a pork and purebred hog producer from Indiana.
Grain farmers are also an important constituency for USMEF, and they are well-represented among the organization’s leadership. Mark Jagels, a farmer and livestock feeder from Nebraska, represents corn producers on the USMEF Executive Committee.
“As a corn and soybean producer, pork and beef exports are very important to me,” he said. “I want to add value to every bushel I grow, and one of the best ways to do that is to export red meat. USMEF’s efforts in solidifying markets and opening new markets for pork and beef are very much appreciated, and the market intelligence we receive is just tremendous.”
“Farmers and ranchers understand that exports have become central to the viability of their industry, whether they produce livestock directly or the grain that supports the livestock industries,” Seng said. “We’re exporting nearly 25 percent of our pork production and 12 percent of our beef production, and there just aren’t many industries in the United States that can say that. Producers appreciate this success, but they know that we have to keep working to maintain it and take it to new heights.”
The pork industry shattered its annual record in 2008 by reaching 4.5 billion pounds in global pork exports, valued at $4.88 billion. It was the 17th consecutive year of export growth for the industry, so breaking the 2007 record came as no great surprise. The 57 percent growth in volume and 55 percent growth in value, however, allowed the new mark to be achieved before Labor Day. Export value per hog processed equated to $42.30.
The beef industry has been steadily climbing back from its BSE-related market closures, which even today severely limit the products allowed in certain markets. South Korea reopened to U.S. beef just last year, and still limits its imports to beef from cattle 30 months of age and younger. Japan is even stricter, allowing only beef from cattle 20 months of age and younger. Other countries such as Taiwan do not allow bone-in cuts or variety meat – items that represent much of the potential business in these markets.
Still, the beef industry achieved $3.6 billion in exports for only the third time in history, and 94 percent of its pre-BSE record ($3.85 billion) set in 2003, with export value per steer or heifer processed totaling $133.44. Seng sees plenty of room for beef export growth, if the United States can continue to make progress on market access.
“We have a very safe product and, obviously, want to be able to export all beef cuts of any age to all markets - that is our ultimate goal,” he said. “But trade doesn’t always work that way, and sometimes an incremental approach can help achieve progress. That’s what we are hoping to see soon as we work for a higher age limit in Japan, access for bone-in cuts and variety meat in Taiwan, and removal of other trade restrictions that are hampering export growth.”
Seng says advancements in technology and product quality are also an important attribute of the U.S. meat industry, and those traits will continue to drive the industry’s competitive presence.
“One of the industry’s biggest technological achievements has been to develop the ability to send chilled product around the world,” he explained. “When I first started, everything we exported was frozen. I can remember going to Singapore, Hong Kong and other places where if you wanted to buy U.S. meat, you had to look for it in the ice cream section.”
“We did a lot of work with university researchers to develop chilled technology, and then worked to negotiate greater market access for chilled beef and pork back in the 1980s,” Seng continued. “Today, most of the meat we sell in North Asia and many other markets is chilled, which gives us a tremendous advantage in comparison to some of our competitors.”
Seng said the industry has also invested in developing cuts that are appropriate for the local cuisine, which is critical to success in foreign markets.
“We’ve always been focused on developing and marketing cuts of meat that are going to appeal to overseas consumers,” he said. “And I think that has really led the way for the tremendous volumes we have been able to move and the sustained success we have achieved.”
Philip Seng is President and CEO of the U.S. Meat Export Federation. Joe Schuele is the organization’s communications director.