Leann Saunders USMEF, Chair 1
Beef Exports Already Set New Single-Year Value Record $7.14 billion in value for Jan.-Dec., 2014 New single-year record, and up 16% from last year $643.2 million in value in December 16.7% higher than December 2013 1.2 million metric tons (2.65 billion pounds) exported Jan.-Dec., 2014 2% higher than last year 100,270 metric tons (221 million pounds) in volume in December Down 2% from last December (USDA statistics compiled by USMEF) (All totals include muscle cuts and variety 2 meat)
Top U.S. Beef Export Markets (Jan.-Dec. 2014) Japan 241,129 metric tons (up 3% versus 2013) value up 14% to $1.58 billion Mexico 242,566 MT (up 12%) value up 26% to $1.17 billion Hong Kong/China 154,591 MT (up 19%) value up 40% to $1.15 billion Canada 137,532 MT (down 21%) value down 12% to $1.03 million Middle East 134,777 MT (down 9%) value down 1% to $274.1 million (USDA statistics compiled by USMEF) 3
Metric Tons U.S. Beef Exports - Volume 300,000 Includes Variety Meats 250,000 200,000 150,000 100,000 Jan-Dec '13 Jan-Dec '14 50,000 - Source: USDA/FAS & USMEF, ASEAN excludes Vietnam 4
US $ (000) U.S. Beef Exports - Value 1,800,000 1,600,000 Includes Variety Meats 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 Jan-Dec '13 Jan-Dec '14 200,000 - Source: USDA/FAS & USMEF, ASEAN excludes Vietnam 5
Measuring Beef Export Value 15% of total U.S. beef production exported in December and 14% in 2014 Up from 13% in 2013 Per-head export value equal to $340.69 in December; $297.68 in 2014 Up 22 percent from 2013 (Export production % includes variety meat) 6
Metric Tons Billion USD U.S. Beef & Variety Meat Exports 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 - $8 $7 $6 $5 $4 $3 MT USD $2 2013: Record $6.157 billion, +12% 2014: Record $7.14 billion, $1 +16% $0 Source: USDA/FAS & USMEF fall 2014 forecast 7
Millions 96% of World s Population Outside U.S. (and 80+% of the buying power) 12,000 10,000 10.9 Billion 8,000 6,000 4,000 2,000 0 1950 2013 2025 2050 2100 World United States Source: United Nations, Department of Economic & Social Affairs, Population Division (2013) 8
North America & Asia Middle Class Population (millions) 3500 3000 3228 2500 2000 1500 1000 1740 Asia Pacific North America 500 0 525 322 338 333 2009 2020 2030 Source: OECD Development Center, 2010 9
The Global Middle Class in 2030 70% 60% 50% 40% 30% 20% 10% 0% Asia Pacific Europe North America C/S America ME & North Africa Sub-Saharan Africa Source: OECD Development Center, 2010 10
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Approaching 40 years of growth and success How do we ensure 40 more? Project 40 USMEF Executive Committee initiative designed to assess members needs and strengthen the organization 12
Phil Seng USMEF, President & CEO 13
Japan-Australia Economic Partnership Agreement Implemented Jan. 15 th Duties reduced to 32.5% for chilled; 30.5% for frozen beef While U.S. & other suppliers continue to pay 38.5% = Australia tariff advantage of 6 percentage points for chilled and 8 for frozen On April 1, these duty rates will drop to 31.5% and 28.5%, respectively. = Australia advantage of 7 percentage points for chilled and 10 for frozen This price gap is compounded by the strength of the U.S. dollar: - Yen is down 15% year-over-year versus the dollar - Australian dollar is down 11% 14
Korea s FTAs with Australia, Canada First round of duty reductions under Korea-Australia FTA went into effect Dec. 12. Second round of cuts came Jan. 1. U.S. pays 29.3%; Australia pays 34.6% Korea-Canada FTA took effect Jan. 1. Canada pays 37.3% U.S. beef maintains tariff rate advantage, but gap has narrowed. To 5.3 percentage point advantage over Australia & 8 vs. Canada Duties to zero by 2026 for U.S.; Australia 2028; Canada 2029 Korea has also completed FTA negotiations with New Zealand. This agreement is expected to be ratified later this year. 15
Other Agreements Australia-China FTA: Upon implementation will eliminate tariffs (currently 12%) on Australian beef over a period of nine years similar to China s FTA with New Zealand. New Zealand-China FTA: Implemented 2008, with tariffs on New Zealand beef phased down to just 1.3% this year (but China also assesses a 13% value-added tax). New Zealand-Taiwan FTA: Tariffs on New Zealand beef were cut in half in 2014, eliminated in 2015. ASEAN-Australia-New Zealand FTA: Implemented 2009, eliminated duties for the Philippines (from 10% to zero by 2012), phasing out duties for Vietnam (from 20% to 7% this year) 16
Percent, ad valorem Import Duties for Key Markets 40 35 30 25 20 15 10 5 0 Duties on most commonly imported U.S. beef products Zero duties for U.S. 17
THE 3 D s Develop Displace Defend 18
Opportunity Example: Japan Total Market Size: Domestic Production: Imports: (US (Others Decline in production (1%/yr - 10 yrs) OPPORTUNITY 850,000 MT 350,000 MT 500,000 MT 180,000 MT) 320,000 MT) 35,000 MT 355,000 MT ( or 782,633,000 lbs) 19
International & AR Update Greg Hanes & Dan Halstrom 20
Impacting the beef trade U.S. & global supplies remain tight Australia drought & supplies Japan EPA; Korea round 2 of tariff cuts; China FTA implementation next Strong USD Focus on demand: strength in U.S. as we import more but export demand held strong mainly growth to Asia Brazil will have relatively steady supplies this year but concerned about their domestic demand Russia, Middle East Hong Kong-China transportation issues 21
Top Beef Exporters 1,600,000 Beef & Variety Meat Exports 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 Source: Global Trade Atlas & USMEF estimates, metric tons 22
Top Beef Importers 2,000,000 Beef & Variety Meat Imports 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 2013 2014 400,000 200,000 - Source: Global Trade Atlas & USMEF estimates, metric tons 23
Million mt Tight Global Beef Supplies 60 50 40 30 20 10 0 2006200720082009201020112012201320142015 Others Canada Russia Pakistan Mexico Australia Argentina India China European Union Brazil Source: USDA/FAS & USMEF estimates 24
Shrinking Beef Supplies not Offset by Brazil, India & EU Growth Thousand Metric tons World United States Brazil European Union China?? India Argentina Australia Mexico Pakistan Russia Canada 300 Forecast Change in Beef Production 2015-2014 200 100 - (100) (200) (300) (400) Source: USDA/FAS & USMEF estimates Decreases expected for our competitors 25
Billions Global Demand Remains Strong $40 $35 $30 $25 $20 $15 $10 $5 $0 Export value has basically doubled since 2009, to about $37 billion this year 2009 2010 2011 2012 2013 2014 Nicaragua Belarus Mexico EU28 Argentina Paraguay Uruguay Canada New Zealand India U.S. Brazil Australia 26
Exporter Cattle Prices 27
U.S. Beef & Variety Meat Exports to Top Markets Metric Tons 300,000 250,000 2013: +3.4%, 1.17 MMT 2014F: steady at 1.17 MMT, tight supplies limit volume growth as expected 2015F: 1.197 MMT, +2% but tight supplies will continue to limit volume growth 200,000 150,000 100,000 50,000 0 2012 2013 2014F 2015F Source: USDA/FAS, USMEF fall 2014 forecasts 28
Global Growth Committee Priorities Apply the following based on greatest market opportunity. Increase access to export markets while addressing production technology challenges. Leverage the brand equity of the U.S. beef industry to promote U.S. beef in foreign markets. Educate beef cattle producers on the significance of the beef export market. 29
USMEF AR Tactics (Market Development & Market Access Strategies for each) Japan Mexico Korea Middle East Hong Kong/China Taiwan EU Central America & DR South America ASEAN Caribbean Greater Russian Region New Markets 30
Japan Per Capita Beef Consumption Market Situation Volume of US Beef/BVM Exports (Jan Nov 2014) Value of US Beef/BVM Exports (Jan Nov 2014) 9.7 kg 225,328 MT (+3%) $1,469,353,000 (+13%) U.S. Share of Total Beef/BVM Import Market 36% Domestic Self Sufficiency 40% 31
Improved Access Japan Processed Products Yakiniku Growth Convenience Stores Regional Retail Chains Branded & Story Beef Online Shopping Social Media 32
Yakiniku Growth Trade Show Linked to Yakiniku Seminar & updated US Beef Yakiniku Guidebook 33
Social Media Blogger Event 34 34
Taiwan Per Capita Beef Consumption Market Situation Volume of U.S. Beef/BVM Exports (Jan Nov 2014) Value of U.S. Beef/BVM Exports (Jan Nov 2014) 5.8 kg 30,984 MT (+6%) $264,792,000 (+15%) U.S. Share of Total Beef/BVM Import Market 32% Domestic Self Sufficiency 4% 35
Taiwan Western Dining Alternative Cuts Consumer Confidence Mainland Tourism Online Retail Quality & Niche Products Expanding alternative cut usage by providing information on new cuts like clod heart and petite tender to target accounts 36
Taiwan Introducing new beef items for local Cuisine plate fingers, petite tender, clod heart also showcased traditional cuts such as rib eye 37
China/Hong Kong Market Situation China Hong Kong Per Capita Beef Consumption 4.4 kg 19 kg Volume of U.S. Beef/BVM Exports (Jan Nov 2014) - Value of U.S. Beef/BVM Exports (Jan Nov 2014) - 137,435 MT (+19%) $1,012,800,000 (+39%) U.S. Share of Total Beef/BVM Import Market 0% 19% Domestic Self Sufficiency 94% 7% 38
China/Hong Kong Booming Beef Demand Foodservice Expansion Convenience Items Improved Access to Hong Kong & Macau Retailer team to the U.S. Winter hot-pot promotion 39
China Out of market since 2004 due to BSE Issues Cattle traceability Beta-agonists Potentially hormones 2014 audits and negotiations provided no outcomes 40
Mexico Per Capita Beef Consumption Market Situation Volume of U.S. Beef/BVM Exports (Jan Nov 2014) Value of U.S. Beef/BVM Exports (Jan Nov 2014) 16 kg 219,712 MT (+14%) $1,050,579,000 (+28%) U.S. Share of Total Beef/BVM Import Market (Jan-Oct) 86% Domestic Self Sufficiency 99% 41
Mexico Market Diversification High-end/Specialty Retail Chef Product Knowledge Food Service Expansion Retail promotions U.S. beef highlighted at top restaurants 42
Mexico Foodservice seminars at resort properties trained staff on attributes of U.S. beef demonstrate handling & preparation techniques 43
Russian Region Need for Education Foodservice Opportunities Regional Expansion Georgia Azerbaijan Kazakhstan Moldova Ukraine Uzbekistan Armenia Georgian chef competition Beef workshop in Moldova 44
Russian Region Moldova U.S. Beef Festival Ukraine Steakhouse Promotion Georgia Steakhouse Promotion & Chef Seminar 45
Central America + DR Market Situation Dominican Republic Guatemala Per Capita Beef Consumption 6.2 kg 5.6 kg Volume of U.S. Beef/BVM Exports (Jan Nov 2014) Value of U.S. Beef/BVM Exports (Jan Nov 2014) 5,849 MT (+73%) $47,978,000 (+60%) 3,773 MT (+63%) $23,235,000 (+61%) U.S. Share of Total Beef/BVM Import Market (Jan-Oct) 99% 64% Domestic Self Sufficiency 94% 96% 46
Central America + DR Growing Demand for Beef Dynamic Foodservice Growth Retail promotions Favorable Access in the Region Educational seminars 47
Central America + DR Seminars/Promotions with El Salvador Importer Sales volume more than tripled over 4 months target retail and foodservice customers 48
Korea Per Capita Beef Consumption Market Situation Volume of US Beef/BVM Exports (Jan Nov 2014) Value of US Beef/BVM Exports (Jan Nov 2014) 14.2 kg 107,147 MT (+14%) $762,815,000 (+44%) U.S. Share of Total Beef/BVM Import Market 35.5% Domestic Self Sufficiency 48% HRI promotion with Ashley, the #1 family restaurant 49
Korea Chilled & Branded Beef Foodservice Distribution Food & Social Media Online Shopping Tourism Growth/Regions U.S. Korea FTA Social dining cooking demonstrations target younger consumers & link to social media 50
U.S. Beef Safety Confidence in Korea 50 Consumer Confidence - U.S. Beef Safety 44.7 40 39.1 38.2 38.5 30 38 Source : USMEF 20 10 5.3 7.7 12.2 15.4 0 Mar, 2010 Oct, 2010 Nov, 2011 Mar, 2012 Sep, 2012 Apr, 2013 Sep, 2013 Jun, 2014 Dec, 2014 51
Chilled Beef Seminar Mobile App Launch Seminar with KCM in Daejeon Attended by restaurants and meat shops Launched B2B mobile ap Replaces Merchandising Manual 52
Camping Festival Promoted with 2 leading women s magazines 200 families & multiple bloggers 12 pages of post-publicity Featured on morning TV program 53
ASEAN Market Situation Indonesia Philippines Per Capita Beef Consumption 2 kg 5.2 kg Volume of U.S. Beef/BVM Exports (Jan Nov 2014) Value of U.S. Beef/BVM Exports (Jan Nov 2014) 6,557 MT (+67%) $26,779,000 (+75%) 11,325 MT (+5%) $54,278,000 (+6%) U.S. Share of Total Beef/BVM Import Market (Jan-Oct) 5.7% 6.8% Domestic Self Sufficiency 95% 78% American Beef Club relaunch in the Philippines 54
ASEAN Foodservice Demand Retail Sector Modernization Convenience Store & Quick-Serve Restaurant Growth Chef training camps with hands-on sessions 55
ASEAN World Food Expo Manila, Philippines Distributor demonstrations buyer/supplier meetings at USMEF booth U.S. Ambassador s presence attracted attention 56
Middle East Market Situation Egypt UAE Beef BVM Beef BVM Per Capita Beef Consumption 5.75 kg n/a Volume of U.S. Beef/BVM Exports (Jan Nov 2014) Value of U.S. Beef/BVM Exports (Jan Nov 2014) U.S. Share of Total Beef/BVM Import Market (Jan-Oct) 1,006 MT (-94%) 5,819,000 (-84%) 112,220 MT (+1%) $130,805,000 (+10%) 4,472 MT (-3%) $55,090,000 (+9%) 818 MT (+1848%) $2,625,000 (+681%) <1% 89% 7% <1% Domestic Self Sufficiency 57% 22% 57
Middle East Foodservice Expansion Retail Sector Growth Casual Restaurants Demand for High-quality Imported Food U.S. beef retail promotions 58
Middle East HRI training workshops 59
Europe Market Situation Per Capita Beef Consumption Total Beef Imports (not including variety meat) all sources Total Beef Variety Meat (BVM) Imports all sources 15 kg 253,907 mt 2,662 mt U.S. Share of Total Beef/BVM Import Market 6.8% Domestic Self Sufficiency 99% 60 60 Funded by the Beef Checkoff.
Africa 61 61
African Population Growth Country Official Population 2013 (millions) Actual Population Estimate 2014 (millions) Angola 21.5 24.4 Benin 10.3 10.6 Congo 4.4 4.4 Gabon 1.7 1.7 Ghana 25.9 26.6 Nigeria 173.6 210.0 Senegal 14.1 15.0 TOTAL 251.5 292.7 62 62
Meat Consumption 63 63
Strengths Population growth Economic growth Increasing disposable income Growing middle class Urbanization Boom in Retail Boom in HRI 64 64
Weaknesses Interest Rates Infrastructure- cold chain Bank trustworthiness Difficult business environment Dependency on oil Corruption Inconsistent/unreliable data 65 65
2013 Animal Protein Imports (includes Poultry) 500000 450000 400000 Volume (MT) 350000 300000 250000 200000 150000 100000 50000 0 Angola Benin Congo Gabon Ghana Nigeria Senegal 66 Beef & BVM Lamb Pork & PVM Poultry 66
Traditional v. Small Grocery v. Modern Retail Benin's Food Retail Sector 1% 14% Nigeria's Food Retail Sector 2% 33% 85% Ghana's Food Retail Sector 5% 65% supermarkets 30% cvs/small grocery 65% traditional open air markets 67 67
Traditional Retail 68 68
Modern Retail 69 69
Modern Retail 70 70
Gabon 71 71
USMEF Africa Next Steps Continue to develop trade relationships with key countries: GHANA, BENIN, & ANGOLA Conduct Education workshops & seminars in regards to US Beef attributes & production practices Organize buyer workshops or showcases for US Beef Exporters 72 72
73 73 Funded by the Beef Checkoff.