"The key is to put the right cut in the right market to maximize value"
US beef exports may top $8 billion for the first time in 2018 and producers present at attending the 2019 Cattle Industry Annual Convention in New Orleans were eager to learn what the future holds for US beef in the international marketplace from US Meat Exporters Federation.
During a series of educational breakout sessions that opened the convention, USMEF President and CEO Dan Halstrom detailed the performance of several key export markets including Japan, South Korea, Mexico and Taiwan and discussed efforts to expand US beef’s presence in emerging regions such as Africa.
"The key is really is to put the right cut in the right market to maximize value. For example, beef tongue to Japan, where yakiniku restaurants are a booming family-style dining segment, virtually every menu at these establishments has beef tongue as the first item. Consequently, the price of a beef tongue is more than $5 per pound. If you put all those tongues in the domestic market it would be well under $1 per pound. So that’s $12 per head in added value, just on a beef tongue", Halstrom explained.
Nevertheless, the Japanese market share for US beef may decline due to new Free Trade Agreements signed by Japan in the last couple of months, such as the one with the EU. At the same time, ratification of the recently negotiated US-Mexico-Canada Agreement is also critical, so that US beef can continue to enter Mexico and Canada duty-free. Mexico is the largest destination for US beef variety meat and an important market for underutilized muscle cuts. When year-end 2018 data is available, US beef and beef variety meat exports to Mexico are expected to exceed $1 billion for the first time since 2015. But Halstrom noted that the US industry cannot take its position as Mexico’s leading beef supplier for granted.
“The US is still the dominant player in the Mexican market. Earlier in this decade our market share was as high as 90% but in recent years, especially with the renegotiation of NAFTA, we’ve lost a few percentage points and now hold 83% of the market", he added.
One of the markets that showed a good improvement in 2018 was South Korea, which has become a tremendous driver of export growth. US beef has also become more affordable in Korea due to declining tariff rates under the Korea-U.S. Free Trade Agreement. "Korea is a market in which we have improved access over our competitors, and you can see how this enhances growth. If we can get similar terms in Japan and other markets, I think you would see similar growth in those areas as well", emphasized USMEF Vice President of International Marketing Programs Greg Hanes.