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Global Beef Roundup: U.S. catching up in Australian export markets

Written by Clint Peck Published on 23 Mar 2012


U.S. beef exports are muscling in on some of Australia’s key overseas markets and are predicted to break records when final calculations for 2011 are reported.

Figures collected by the USDA and U.S. Meat Export Federation show U.S. beef exports passed $5.4 billion last year.

And while Canada and Mexico are the biggest customers for U.S. beef, it is also making inroads into Japan and Korea – long-time strongholds for Aussie beef.

From January to November last year, the U.S. exported 129,552 metric tons (MT) of beef to Japan, an increase of 33 percent compared with the same period a year earlier.

There were also increased sales to Korea, up 34 percent to 123,456 MT for the first 11 months of the year. Analysts say the weak U.S. dollar helped make the country’s beef more competitive.

Meat and Livestock Australia chief economist Tim McRae says Australian producers “should be worried” about the increasing U.S. share in traditional Australian markets.

“It is partly in response to the very weak U.S. dollar, which has made the U.S. product more price-competitive,” he said. “It’s certainly a big caution sign for Australian producers, but it is not totally unexpected either.

Ever since the U.S. was locked out of markets after its outbreak of BSE (bovine spongiform encephalopathy) in December 2003, we’ve been waiting for them to come back into the markets, and they are starting to now.”

But McRae says it’s important to put the rises in U.S. exports to Asian countries into perspective.

“The U.S. is still only sending about one-third of the product it used (pre-BSE) to send to Japan and about half the amount to Korea,” he said.

What is of greater concern to McRae is the move by Japanese consumers away from high-end restaurants serving grain-fed beef to those serving more “manufacturing beef.”

This is seen in the record amount of Australian frozen beef shipped to Japan and the lowest amount of chilled, higher-quality beef shipped from Australia to Japan since 1994.

McRae says that while Japanese consumers remained very price-conscious, Australia has a fight on its hands competing with U.S. product, which has a price advantage.

“We still have the advantage of a ‘clean, green’ product and that goes a long way,” he explains. “Japan is our largest market and will remain so for many years but, given expanding markets in other countries, we have found other customers who want significant amounts of our product.”

Argentina
The Argentine Chamber of Meat Trade and Meat Products (CICCRA) says that the consumption of beef fell 6.7 percent in 2011, as retail beef prices increased 130 percent.

That’s the lowest recorded level of meat beef consumption since records began in 1920, when the per capita beef consumption was 47 kg (103 pounds).

Meanwhile, sales of poultry and pork products have increased. This is likely due to its price competitiveness rather than changes in consumer eating habits.

The president of the Poultry Processing Companies (CEPA), Roberto Domenech, says in 2011 the consumption of poultry meat increased to 40 kg (88.0 pounds) per capita, a 1.5 kg (3.3 pounds) increase. CICCRA reports that the consumption of pork products increased 9.2 percent over the last two years.

Butchers and traders are saying that while they have seen slight increases in the sales of poultry and pork, these increases do not match the drop in beef consumption.

Economists from the Institute of Economic Studies of Rural Argentina say that between 2009 and 2011 beef prices rose by 80 percent, while consumption fell 14 percent.

They say price increases can be attributed to increased global beef prices but also a decrease in the number of cattle slaughtered last year in Argentina.

Canada
The Philippines’ government has reopened the country’s ports to imports of live Canadian cattle, sheep and goats. Agriculture Minister Gerry Ritz and International Trade Minister Ed Fast say the decision is another win for Canadian agriculture.

The Philippines imports about $9 million in live cattle from various countries each year and about $300,000 worth of live sheep and goats.

Canadian producers “now have the ability to compete for sales in this market,” says Fast, noting the Philippines imported other agricultural goods and food with a total value of over $235 million in 2010 alone. Canadian products formed 20 percent of the Philippines’ total meat and poultry imports in 2008.

The Philippines was among many export markets to shut its doors to live ruminants in May 2003 following the discovery of Canada’s first domestic case of BSE in an Alberta cow.

The country restored market access in 2007 for Canadian beef and, in 2010, lifted a BSE-related ban on rendered meat and bone meal imports from Canada.

Mexico
U.S. beef imports from Mexico in 2010 totaled 107 million pounds, making Mexico the fifth-largest exporter of beef to its northern neighbor. Through November 2011, imports of beef from Mexico increased by 46 percent over the same period in 2010.

The majority of beef shipments to the U.S. from Mexico is processing beef, which is mixed with trim for grinding into hamburger in U.S. beef plants.

There appear to be two main reasons for the increasing exports of Mexican beef to the U.S. since 2003.

The number of Mexican Tipo Inspección Federal (TIF) plants (federally inspected slaughter plants meeting standards similar to those in the U.S.) has increased – as has the amount of grain-fed beef in Mexico.

An increase in TIF processing capacity, changes in beef demand in Mexico and the increase in Mexican grain-fed cattle for slaughter are resulting in a greater supply of beef available and of interest to the U.S. import market.

The Mexican beef industry continues to improve infrastructure and marketing channels but still faces challenges in competing for inputs, feed sources and forage and land availability from domestic crop production.

Mexico has the potential to keep growing as a supplier of beef to the U.S. as the changes in demand, cattle feeding and slaughter in recent years are sustained.  end_mark

Clint Peck is the owner of Global Beef Systems, LLC.

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