Why Export Markets for Beef are so Valuable
Three experts talk market access, premium beef and dollar impact.
SAN ANTONIO, Texas (Feb. 4, 2015) — It’s no surprise the United States is known across the globe as the “gold standard” for high-quality beef. After all, an estimated 80%-82% of all grain-fed beef is U.S.-produced, said Larry Corah, with the Certified Angus Beef® (CAB®) brand, during the Cattlemen’s College® export session Feb. 4.
Jay Theiler (left) of AgriBeef, and Paul Clayton (right), U.S. Meat Export Federation (USMEF), rounded out the panel on beef trade during the 2015 Cattle Industry Convention & NCBA Trade Show in San Antonio, Texas.
Jay Theiler of AgriBeef, and Paul Clayton, U.S. Meat Export Federation (USMEF), rounded out the panel on beef trade during the 2015 Cattle Industry Convention & NCBA Trade Show in San Antonio, Texas.
“Our main advantage is premium-quality beef,” Theiler said. “We are recognized as the gold standard around the world. It’s pretty fun to go out and sell our products because of the demand.”
For AgriBeef, an integrated beef production company, export strategy has as much to do with the future as it does today’s marketplace.
Currently, 96% of the world’s population lives outside the United States.
“That’s where the money is, or is going to be,” Theiler said, noting 80% of global middle-class growth is projected to come from Asia.
Trade is also “good risk diversification,” he said. For economic growth last year the U.S. ranked 166th out of 196 countries.
That’s why AgriBeef markets three beef brands in 30 countries worldwide. The CAB brand has built worldwide marketings to 80 countries with a similar strategy.
“The upside potential in the global marketplace for a brand like ours is immense,” Corah said.
CAB attributed 13.5% of sales to its international division last year. Of that 120 million pounds (lb.), 60% were end meats, or items from the chuck and round, compared to the strong domestic demand for such middle meats as strip loins and tenderloins.
“The international market is critically important,” Larry Corah said.The top CAB international markets are Canada, Mexico, Hong Kong, Japan and Korea, but in the last decade the brand expanded its presence in popular tourist areas in the Caribbean and in South America.
The southern continent is home to some “big beef-producing countries, but a lack of quality product in those marketplaces is the way, the opportunity for CAB to differentiate ourselves,” Corah said.
Exports added $352 per head to the value of each animal in 2014, and some of that comes from more than doubling the value of items like tongues, livers and hearts.
“They are not normal for consumption here in the United States, but they’re sure popular overseas,” Theiler says.
That’s part of the drop-credit equation (including hide, rendered product, pet food and variety meats), which has added $36 per head during the last two years, Clayton said.
Free-trade agreements and lifting other barriers increases value across the board, but uninterrupted delivery is key to fulfilling demand. A current point of concern for the panelists: labor strikes on U.S. West Coast docks.
“We’re unable to move products,” Clayton said. “That’s a domestic issue, but it sure affects international when you can’t get the products out. The vast majority of our markets are in Asia or places that would have to use the U.S. western docks.”
Theiler said it has brought cattle prices down and he worries about what it’s doing to long-term demand.
“We are shipping 20% of what we normally ship overseas. That means that the premiums aren’t there so those items that normally go overseas are bringing less money,” he said. “We are fortunate we are the leader, but they are looking for other suppliers of high-quality beef. Will we get this all back?”
Observers are hopeful, because exports have grown to be an integral part of the beef business.
“The international market is critically important,” Corah said.Editor’s Note: The articles used within this site represent a mixture of copyrights. This article was written by staff or under contract for the Angus Journal. If you would like to reprint or repost an article, you must first request permission of the Angus Journal by contacting the editor at 816-383-5200; 3201 Frederick Ave., Saint Joseph, MO 64506. The Angus Journal claims copyright to this website as presented. We welcome educational venues and cattlemen to link to this site as a service to their audience.