USMEF: Strong growth potential in Asia for US beef and pork
Asia Pacific is a major market for US red meat, including beef and pork. Joel Haggard, US Meat Export Federation's (USMEF) senior vice president for Asia Pacific, discusses the importance, potential and demands of the region, as well as market access challenges in China and the impact of PEDv on US pork exports. What percentage of total US meat is exported to the Asia Pacific region?
During the first six months of 2014, US pork exports to Asia Pacific, including Japan, South Korea, China, Taiwan, Hong Kong, ASEAN, Australia and New Zealand, accounted for 50% of the total export volume and 55% in value terms.
In the same period, excluding Australia and New Zealand, US beef exports to the region accounted for 58% of the total exports in volume and 56% in value terms.
Which are your top three markets for US pork and beef in the region?
Based on statistics from importing countries, from January to June this year, US market share of the total South Korean beef market is the highest at 37%, followed by the 36% market share in Japan (muscle cuts only) and 30% in Hong Kong (muscle only).
For pork imports (muscle cuts) during the first six months, the US has the highest market share in Japan, accounting for 42% of the total import volume; followed by South Korea (37%) and China (26%).
Which region do you see the strongest growth? Which are the potential new markets for US meat in the near future?
We see strong growth potential in all Asian markets for both US beef and pork. For beef, we believe additional growth is possible in Japan, especially if a Trans-Pacific Partnership (TPP) agreement provides meaningful free trade conditions to that market. South Korea looks promising as duty reductions under the South Korea-US Free Trade Agreement (KORUS) continue to bring down US beef import costs.
China holds huge potential and we look forward to a resolution of our beef access issue, especially considering that OIE experts have accorded the US negligible BSE (mad cow disease) ranking. It is the lowest risk level and the same for other major suppliers to China, including Australia. Other emerging markets, such as Indonesia and the Philippines, also hold promise for US beef exports.
Japan is also our export market with the highest pork export value, and a TPP agreement will bring us more opportunities there. Benefiting from KORUS, which has lowered duties on US imports, US pork exports to South Korea were up by 30% on-year through June this year.
Though it is difficult to predict for the Chinese market, we will probably see a drop in exports to China this year. This is because China has ample domestic supplies, as the country's pork production for the first six months was up by 3%. In addition, high prices of US pork and China's tighter requirements to assure US pork imports are free of ractopamine are part of the reason. In the long term, however, China could be an import powerhouse. Even at 90% self-sufficiency in pork, import needs in China would equal 5 million tonnes.
Are there specific consumer demands by these major importers of US pork and beef?
For both meats, we stress the quality, safety and freshness of our products, especially chilled meats that we sell to Japan, South Korea, Taiwan, Hong Kong and recently US pork exports to China.
Most of the US beef shipments to Asia consist of Asian-style cuts used in Asian cuisines, such as Yakiniku (BBQ), shabu-shabu (hotpot), or even traditional Chinese cooking. The US is also the source of choice for higher quality middle meats, such as rib eye steak, striploins and tenderloins. We also try to match cuts to local cooking styles and help explain to retail and foodservice operators how they can make a profit from selling and serving US beef. This is the same for US pork.
US pork exports to China is seen slowing, what actions is USMEF taking to help US pork exporters address this issue?
We commenced retail sales of US pork at Chinese supermarkets late last year and initial results are encouraging. Though it makes up only a small percentage of total exports, the product has been well accepted for its high quality and reasonable price.
There are market access challenges in China, especially the country's resistance over ractopamine. Does USMEF see beef as the alternative?
Some US pork suppliers are meeting China's requirements and we continue to promote such products within the marketplace.
For beef exports, US exporters will have to meet China's import requirements before we can begin promoting US beef. However, we are confident that China will accept US beef, because consumers like well-marbled, tender and juicy beef. Once the market is open, we foresee ample demand for grain-fed beef. In fact, demand is large enough that many suppliers, including our competitors such as Canada and Australia, will be able to sell products and fill niches in the marketplace.
What do you think are the key challenges in US pork and beef exports?
Market access is our main challenge. The US expects its trading partners to abide by science-based rule making and consider international standards in setting import conditions.
Compared to other meat exporting countries, what are the advantages of meat products from the US?
As do our main competitors, the US places a priority on assuring that safe and wholesome products are produced at all times, and ensures what is exported is the same product supplied to our domestic consumers.
The US has an abundance of grain, ideal climatic conditions for raising livestock and a farm population that has embraced sustainability for many decades. US farmers utilise safe technologies, which allow them to conserve natural resources by continuously improving efficiency.
Known for its tenderness, juiciness and flavour, the quality of US beef and pork products represents the sum of our grain and soybean resources, our farm practices and the overall care we exercise throughout our production regime, which ensures that we produce products that will please our customers and consumers.
With PEDv continuing to affect US pork production, what trends do you expect of the US red meat exports in the near future?
Despite decreased production and higher prices, we expect a slight increase in the volume of US pork exports this year, including pork variety meats. During the first five months of this year, pork exports totalled about 964,000 tonnes, 9% above the pace of the same period last year. Demand has been driven by tighter supplies in PEDV-affected markets, including Mexico, Japan and South Korea. We forecast that our exports will finish out the year up 2% in volume to 2.197 million tonnes and up 4% in value to US$6.27 billion.
Global beef demand remains strong. Through May of this year, US beef exports were up 9% on-year in volume to 479,000 tonnes, and up 17% in value to US$2.64 billion. We forecast that US beef exports, including both muscle cuts and variety meats, will finish up 2% in volume to 1.191 million tonnes and 6% in value to US$6.523 billion.
Do you expect a long-term negative impact on US pork exports brought by PEDv?
In its latest World Agricultural Supply and Demand Estimates report released on August 12, USDA forecasts that US pork production will recover in 2015 to 23.280 billion pounds (10.56 million tonnes). That is slightly above the 2013 level of production and an increase of 2% over this year's forecast production, which is 22.779 billion pounds (10.33 million tonnes). In response to the optimistic forecasts about a recovery in production and lower grain prices, we expect more favourable export conditions and lower export prices compared to this year.
Since PEDv is relatively new to the US, there is uncertainty over how the disease may spread. However, the number of new weekly cases has been dropping steadily this summer. US pork producers have also been able to compensate for the decline in slaughter by feeding hogs to heavier weights.
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