November 14, 2022
USMEF conference examines export outlook, production constraints, economic headwinds
The US Meat Export Federation (USMEF) Strategic Planning Conference was recently in Oklahoma City, Oklahoma, the United States, attracting farmers, ranchers, processors and exporters from throughout the country.
While US red meat exports will likely set a value record approaching $20 billion this year, the industry faces an array of obstacles related to the sluggish global economy, weakening currencies of key trading partners and lingering effects of the pandemic. Challenges are also mounting on the production side, especially for livestock producers impacted by drought.
Keynote speaker Randy Blach, chief executive officer of CattleFax, detailed the larger-than-expected contraction of the US cattle herd, which helped drive US beef production and exports to record highs in 2022 but will be a significant constraint for US exporters next year.
Drought has also heightened production costs for cattle feeders.
"If you're putting an animal in a feedyard anywhere in the Central Plains – let's say Kansas or Oklahoma – your cost to put on a pound of gain is between US$1.30 and US$1.40," Blach explained. "We have not seen that historically, not even back in 2008 when we had the ethanol mandate, and for a period of time, corn was at US$8.00 per bushel. This is an interesting time, when the market needs more corn and where it's needed most, the corn just isn't there."
But Blach also highlighted the remarkable efficiency and sustainability of the US beef industry, which he maintains is well-positioned for success even in this challenging environment.
He added that the US achieved record beef production in 2022 with 30 million fewer cattle than in the 1970s. "That's what sustainability is – doing more with less and doing it better with great animal husbandry," he said.
Blach also extolled the efficiency of US corn and soybean producers, noting that it is a critical factor in the global success of the US meat industry.
USMEF president and chief executive officer Dan Halstrom gave members an update on year-to-date export results and his outlook for coming months. While challenging times lie ahead, Halstrom highlighted the importance of market diversification in keeping beef exports on a record pace through the first three quarters of 2022. Pork exports are also regaining momentum, surpassing year-ago levels the past two months.
However, Halstrom listed several mounting obstacles for US exports, including global inflation, ongoing supply chain challenges and the strengthening US dollar. As an example, Halstrom noted that devaluation of the Japanese yen has pushed prices for US meat products 30% higher than a year ago in an extremely competitive market.
Market diversification has long been a top priority for USMEF, and Halstrom praised the U.S. industry's commitment to developing new and emerging markets for red meat exports. He noted that the often-tense US-China relationship underscores the importance of this strategy.
Halstrom explained that while China is a major US red meat customer, on pace to purchase US$4 billion in US beef and pork this year, the country is not nearly as dependent on China as most other suppliers.
"Uruguay exports 58% of its beef production to China, New Zealand (at) 44%, Brazil (at) 18% and Australia (at) 14%," Halstrom said. "But even with our recent growth, just 3% of US beef production is exported to China."
For pork muscle cuts, just 2.3% of U.S. production currently goes to China. Chile and Brazil ship 17% of their pork muscle cut production to China, while China accounts for 9% of Canada's production and 6% for the European Union.
Trade barriers often make market diversification more difficult, and Halstrom asked USMEF members to remain vigilant and make their voices heard in Washington.
"Our competitors realise the value of trade and they're not standing still," Halstrom said. "Hopefully, we can encourage more aggressive action, including getting a USTR chief ag negotiator and USDA undersecretary for trade confirmed soon."
USMEF members also heard from Mark Slupek, deputy administrator of global programmes for the USDA Foreign Agricultural Service (FAS). Slupek provided a brief history of the USDA's investment in export market development, explaining that it dates back to the Dwight Eisenhower administration. He praised USMEF as one of FAS's most successful cooperators, noting that the USDA and USMEF have had an excellent working relationship for more than 40 years. He added that strong industry support for the USMEF, from a diverse range of agricultural sectors, helps ensure consistent funding from USDA.