Increased access to Japan is one reason Erin Borror, U.S. Meat Export Federation, is optimistic about beef. Also, Taiwan has agreed to a “science-based protocol for beef additives, opening up a $200-million market.”

Borror, addressing the Beef Financial Management Conference in Amarillo, said the industry expects to set a record of “well over $5.5 billion in beef sales next year. We will continue to focus on an improved bottom line for beef producers.”

The global supply of beef “is tight. It peaked in 2007 and is down about 2.5 percent now. We expect a small uptick this year. And we expect continued strong demand from countries that cannot meet their demand.”

Global supply in 2011 “was really tight. The U.S. was flat but the other major producers were down. It turned this year with increased production, especially in Brazil—up 2 percent— Argentina—up 2.8 percent—and Australia—up 2.3 percent—but is lower in the U.S.—down 2 percent.”

She said a big increase has occurred in the past five years in India— up 10.6 percent for 2011/12—for production and export. Much of that production is water buffalo marketed in the Middle East. “That doesn’t compete directly with the United States.

“We’ve seen drops in the United States, Brazil and Argentina the last five years.”

U.S. is top beef exporter

The United States regained the top spot as leading exporter of beef in 2011, Borror said. “Brazil has room for growth and a greater increase in per capita consumption than the United States. They also have increased consumption of poultry and pork.”

Australian beef export level remains flat in 2012; the United States is up 4 percent in value but down 11 percent in volume. “Higher price makes up the difference,” Borror said. “Brazil’s exports are up slightly.”

India, she added, shows strong growth with a potential 30 percent increase in exports. “Mexico is shipping record volumes, too, but that’s still a small amount.

“The United States is still the largest beef exporter in the world and also the largest importer.” Canada accounts for the largest percentage (35 percent) of beef brought into the United States.

She said the United States still has an edge with high quality beef with grain-fed versus mostly grass-fed beef from other competitors. The relatively weak U.S. dollar, compared to other currencies, helped move U.S. beef in 2011. “We lost some of that advantage in 2012, however. That’s why the value of U.S. beef exports is up while the volume is down.”

The Japanese yen has been very strong, making U.S. beef more affordable. “Other currencies remain weak,” she said.

But U.S. beef remains a bargain. “High quality, grain-fed beef is affordable.”

Exports are important since U.S. consumption is down. “U.S. combined red meat and poultry consumption in 2013 is expected to be 11percent less than in 2007. Demand outside the United States is stronger. We see a lot of potential for growth both in the United States and the world.”

Increased gross domestic product of developing countries will mean higher demand for meat, Borror says. “As incomes increase, beef demand grows.”

The Chinese factor could be huge. “The middle class in China is expected to exceed the total U.S. population by 2020. That will be a significant number of people with higher spending power.”

China market is closed

She said China currently has “record high beef prices.” That market, she added, offers potential “for steady growth and a huge opportunity,” but remains closed to U.S. exports. The European Union also offers increased market potential for U.S. beef.

Japan also offers opportunities with relaxed trade restrictions. “We hope to see increased access to Japanese markets early next year,” Borror said.

Currently, Japan allows only whole-muscle cuts from U.S. cattle that are 20 months old or younger. That’s a holdover restriction from the 2003 BSE episode, after which Japan banned all U.S. beef imports. The 20-months-or-less restriction is a moderation of that ban and further loosening of the restriction is expected in 2013.

She refers to a proposal, LT30 (less than 30), which will allow U.S. beef imports from cattle less than 30 months old into Japan.

Before LT30, the United States could send in only a limited supply of beef; supply was inconsistent; and price was high. “After LT30, more than 95 percent of fat cattle are available for export into Japan,” Borror said. Supply will be consistent by season and price will be competitive with other Asian countries. The Japanese market also gets increased supplies of thin cuts, chucks and variety meats, higher grade beef and “branded US beef.”

Borror says approval of this new policy would be a huge win for U.S. beef.

Russia’s entry into the World Trade Organization also holds promise for U.S. beef exports. Borror says U.S. beef quota into Russia would increase to 60,000 metric tons, up from 41,000 in 2011.

Educational efforts are also underway to teach Russians about high quality beef, she said. “Russia offers a significant growth potential.”

She discussed Mexico trade and noted that imports of Mexican feeder cattle are up 20 percent. U.S. imports of Mexican beef (through July) are up 47 percent. “Exports to Mexico are down 17 percent. U.S. exports of pork and poultry to Mexico are both up—13 percent and 14 percent, respectively.

Hurdles to increased beef export remain. “Indonesia offers huge export potential, but that market is closed. Consumption is low.”

She said continued lack of access to China remains a challenge as does unrest in the Middle East.

Taiwan has implemented maximum residual levels of ractopamine (used as growth promoter) as a science-based process. The Korean free trade agreement offers promise, but “Korea has a large domestic beef production anticipated for this year and next year.”

Drought and further liquidation of the U.S. cattle herd poses hardship for the beef industry. “Larger beef supplies in Australia and Brazil might weigh on the market, but global supplies are still relatively tight,” Borror said.

U.S. beef export is expected to be off by 7 percent by the end of the year, she added, “but we expect value to increase by 13 percent in 2013, driven by Japan. We see a big potential to work our way back into the Japanese and Korean markets.”

Japan also may join the Trans-Pacific Partnership, which could improve U.S. agriculture export potential. “We also need expanded access to Hong Kong.

“Exports are important to our industry,” she said. “For one thing, exports maximize carcass value because we export some of the lower value cuts. The world needs high quality beef. USMEF will continue to market high quality U.S. beef and we must keep differentiating, especially with higher prices.”