January 4, 2019
Iowa beef council sees export potential in Japan, South Korea for US beef
South Korea, currently the number two export market, is edging forward to compete for the same product.
Given the potential of these markets, IBIC, funded in part by the Iowa State Beef Checkoff Program, recently joined other commodity partners on a meat trade mission to both countries.
During the mission led by the Iowa Economic Development Authority and coordinated with US Meat Export Federation (USMEF), there were meetings with top import companies interested in US beef.
Tamara Heim, beef farmer and IBIC elected director, and Dan Hanrahan, beef farmer and IBIC director, represented the interests of Iowa's beef farmers.
IBIC attributed Japan's position as a huge market for US beef to Tokyo's huge population. "For example, 25% of the population is of the 60-70-year age group and they have increased their meat consumption by 45% since 2006," the organisation explained.
Japan also has a high demand for beef. As the quantity of prime grade beef production continues to increase in the US, Iowa needs an outlet - like Japan - for this high-quality beef.
In addition, the Japanese consumer is demanding a leaner beef, which the US prime grade fits such a meat type perfectly.
Furthermore, Japan demands variety meats such as intestine and tongue. Beef tongue can sell for more than US$6.00/lb. in the country as compared to US$1/lb. in the US.
"...convenience is key in Japan. From Bento style lunch boxes to standing steak houses, the Japanese consumer wants convenience," IBIC added.
Chilled beef imports that feed these convenience markets are up 30%, according to the USMEF. However, IBIC warned this market may face some difficulty in the future due to tariffs.
The current tariff on US beef is 38.5%. US competitors - Australia, New Zealand, EU and Canada - will see a reduction in their tariffs beginning December 30. This makes US beef more expensive for Japan to import.
Market access is critical to the export conversation, IBIC said.
"Korea is currently in a "Meat Boom"! This is an amazing trend considering in 2006 US beef exports to Korea were zero," IBIC commented on the South Korean market.
"Consumer confidence is currently trending at 52.2% but lingering fear of BSE (bovine spongiform encephalopathy) is still the limiting factor. Trends contributing to the meat boom are average annual income growth of $10,000 since 2006, the Korean diet becoming more westernised and meat affordability are other factors."
South Korea imports close to 70% of its beef and of that 60% is US beef.
"Korea is a great market for products that are not highly consumed in the US such as ribs, chuck roll (neck) and shoulder clod. Packaging meat in Korea has a wide range from large primal cuts to individual servings," IBIC elaborated.
"I had the opportunity to visit Costco in Korea. While it looked much like a Midwestern Costco, you could physically see the demand for beef in the amount of people waiting at the meat coolers to pick their cut," said Tamara Heim.
"More specifically, there were more coolers and consumers hovering around the US beef than our competitors!"
Despite challenges arising from tariffs, IBIC sees "the tariff situation in Korea" as "beneficial to US beef."
"Tariffs on US beef are currently at 21.3% and scheduled to go to 0% in 2026. Market access for processed beef will be a great area for growth in this export market that currently is not allowable for export in this country," the organisation added.
"Overall, Asia is a huge market for US beef and their desire for continued relationships with US beef producers resonates and was evident in the meetings," Heim said.
"In meeting with Japan's three largest meat processors, it was amazing how many times I heard the names of rural Iowa communities. It was something to be able to talk about Iowa beef and agriculture halfway around the world at a depth some of us might not be able to talk with our own neighbors," Dan Hanrahan remarked.