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Official: Global markets spiking upward for U.S. beef

David Cooper, Progressive Cattleman Editor Published on 13 September 2010
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Beef producers have reason to brush up on their global geography – notably in Europe, Russia and the Middle East, if the past eight months are any indicator. A brave new world is expanding for beef exports, according to John Brook, the U.S. Meat Export Federation’s regional director for Russia, Europe and the Middle East.

Many indicators show world demand in those regions is ripening fast, and the potential for export growth is made possible by a robust awareness of quality American beef. 091310_carljr091310_carljr

The latest USMEF statistics reaffirm Brook’s assessments, as global beef exports in the first half of 2010 climbed well above 2009 levels. The beef export value “surged to $366.3 million in July, pushing the cumulative January-July value to more than $2.19 billion – 25 percent higher than last year’s pace and virtually even with the pre-BSE peak value of 2003,” according to the federation’s September report. 

Brook, an Oxford-trained expert on meat exports who has spent years promoting markets in Europe and the Middle East, spoke of foreign promotional efforts the USMEF makes in its marketing contract with the Beef Checkoff, during a Sept. 8 webinar hosted by the Cattlemen’s Beef Board.

Middle East

While not an export giant for the U.S., buyers in the Middle East are purchasing more U.S. beef thanks to rapid economic growth in several countries. Higher oil prices have enabled consumers to pursue higher-priced meat cuts beyond the traditional and popular variety meats. Egypt, for example, has been a longtime buyer for livers, kidneys and hearts, Brook said. 091310_egyptpromo

“This market is a commodity market,” Brook said. “Beef livers are cheap protein. Egypt’s large poor population needs access to this protein and a considerable portion of edible beef livers end up in Egypt.”

But Middle Eastern nations such as Saudi Arabia, the United Arab Emirates, Kuwait, Bahrain, Qatar, Jordan and Lebanon, he said, are all starting to import beef muscle cuts.

Export sales are brisk in Egypt, in spite of the consumer trends that still rely upon traditional markets in towns and squares, where beef is defrosted and sold in chunks. But the beef surge is also “going to the niche of hotel and high-quality restaurant business,” Brook said. The nation’s wealth is also spreading into more middle-class circles, he said, with the proliferation of family restaurant chains such as Ruby Tuesday’s and Fuddruckers.

“South American prices are pretty firm, (and) some lower-value cuts in the United States are finding way to processing or fabrication within Egypt. So we have competitive prices between Brazilian and U.S. cuts.”

Brook said compared to Russia and Europe, the Middle East shows the greatest growth potential for U.S. beef. That’s due to the strong economy in oil-exporting nations, and also because competing exporters in Australia and Argentina aren’t able to meet Middle Eastern demand.

Russia

With 6.5 million square miles of land and 141 million people, export opportunity has always been an unfulfilled one for U.S. beef producers. But 2010 is showing improved signals in the Russian export market.

New statistics released by the USMEF showed beef export volume to Russia in 2010 reaching 32,982 metric tons worth $94.1 million – a jump of 154 percent in volume and a 575 percent increase in value. 091310_vladivostok

The biggest obstacle, however, is with Russia’s import quota on U.S. beef of 21,700 metric tons, which started in 2007 when the nation lifted its U.S. beef trade ban from the BSE crisis.

Trade reps are aiming to build demand among Russian restaurants, and a larger marketing push will be made in Russia for the 2014 Olympic Winter Games in Sochi. Although Brook said Australian beef is still the king of exports in high niche markets.

“We are getting U.S. beef back into that sector but it’s proving to be quite a struggle,” Brook said.

U.S. trade data show the import quota has mostly been met for 2010. But export officials still want to work with Russia on price negotiations in order to get more affordable meats into the country. That process will require longer efforts, given how Russian buyers usually want only specific cuts to satisfy their traditional sausages and meats.

“What we do is concentrate our promotional efforts, and to encourage the restaurant sector and food sector and retail sector to feature U.S. beef,” Brook said. “To do that we talk about quality aspects of U.S. beef, specifically the underutilized cuts.”

“Because of feeding, and beef breeds in United States, this is something which people are surprised about – that you can get the same tenderness and succulence from these other cuts, which you wouldn’t get from meat imported from South America and the European Union.”

European Union

Brook, whose home base is in Brussels, Belgium, sees intriguing trends among the 27 European Union countries, where eating habits, niche restaurants, wealth and advanced retail delivery systems are starting to boost the demand for U.S. beef.

“U.S. beef is the most expensive beef in the European Union,” Brook explained, largely because of the quality of the product and a new EU duty-free quota that requires beef come from non-hormone treated cattle (NHTC).

U.S. beef is featured regularly in 12 countries, Brook said, noting strong markets in Sweden, Poland, Czech Republic, France, Italy, Germany, Spain, Portugal, and even with its economic turmoil, Greece.

European consumption of U.S. beef will be 10,000 metric tons over the NHTC quota this year – showing a small volume, but very rampant pace of growth. In 2011, Brook predicts another 4,000 to 5,000 metric tons of beef purchases.

The reason is simple – U.S. beef stands alone in its quality and production.

“U.S. beef is easy to market in the European Union because it’s so different,” Brook said. With no dedicated beef herd for beef meat in Europe, more than half the meat consumed as steak comes from dairy herds and dairy breeds.

Europe’s foodies have long pushed for lean cuts, Brook said, noting the example of the Blue Belgian breed. Although a source of pride in that country, the beef so devoid of marbling, he said, after frying it for 30 seconds on each side, “you have a piece of concrete.” 091310_johnbrook

“The EU doesn’t have anything like the U.S. with a dedicated beef herd with excellent beef breeds like Angus and Hereford, and a systematic feeding system. So the real problem for European consumers and distributors is how do you get consistent quality. That is where the U.S. comes in en force, because the quality is excellent and it’s always the same, it’s very consistent.”

Europe’s retail and supermarket delivery system is ahead of other regions, but lacks consistency across the continent. Brook said the USMEF is expanding its advertising campaigns with a more populist audience in mind.

“We’re trying to get as many interviews, articles and advertisements published in trade journals and in journals that go beyond the traditional meat trade, and begin to touch a little bit the public,” Brook said.

“We’ll be able to move beyond this high-quality restaurant and hotel tandem and move gradually into the retail sector.”

Escalating demand in EU

To demonstrate how sharply the demand for beef climbed in the European Union this year, Brook recounted how a number of importers had to ration sales to clients between March and July.

“There was not enough hormone-free beef,” Brook said. That was due to a “slight seasonality” in cattle production. Other factors included that the EU market was rather weak in the 18 months prior to spring of 2010.

“The result had been the premium paid for non-hormone-treated beef dropped rather considerably. That discouraged a certain number of farmers and feeders to put their cattle into the non-hormone-treated scheme.”

Since the trend reversed course drastically since then, with the premium “higher than it’s ever been before,” Brook believes more people are readjusting their herd for European markets.

“I am told from packers in the United States that the supplies of cattle that they are now seeing for September, October and November look very good,” he said. “And so they will be able to satisfy all the orders they’re receiving from their European Union clients. Those clients, some of them tell me they expect to double the tonnage that they’re going to import in the next 12 months.”

Animal ID

Six years after the BSE crisis created a global crisis for U.S. beef in Asia and Europe, Brook said the anxiety over mad-cow disease has changed significantly among consumers in Europe.

“BSE is no longer an issue in the European Union,” he said. “People have lived with it for 20 years. And today nobody in the EU, other than vegetarian people, would say that this is an issue. So the U.S. has absolutely nothing to worry about the BSE when appealing to the European Union.

But producers in the U.S. cannot ignore the lessons of the BSE crisis, Brook said, especially as it relates to the need for an animal ID policy that will protect their worldwide product. EU nations now require firm traceability standards on domestic beef – a policy the U.S. needs to follow, Brook said.

“It’s something which staggers me for a country like the U.S., which gets such good value from their exports to Japan, Asia, Mexico and the European Union, that the U.S. is not just dragging its feet on traceability, but has appeared to have taken a step backwards with the dropping of the animal national identity scheme.”

Brook said it was “an absurdity” that how the U.S. fought through export bans due to BSE for several years, but still has no traceability policy in place.

“Traceability is an assurance,” Brook said. “It gives a guarantee of a country’s capacity to continue exporting when something happens. … If you have a foot-and-mouth outbreak in the United States, if you’re not able to identify where animals came from, where they’re moving to, in order to confine and to stop the problem, then you potentially find yourselves closed off from markets.”

Rating the markets

While Brook said the Middle East is the strongest potential market right now, “the European market is a close second.”

“It could even lead the Middle East in value terms … because the product coming to the European Union is at a significant premium to that in the Middle East.

Russia is in third place, Brook said, not because of any quantity or value element, but simply due to “potential for development.”

Compared to three years ago, when BSE restrictions were just coming down, Brook sees the resurgence of U.S. beef as an easy sell, because of its superior quality.

“When I talk to importers and distributors they say no, there isn’t substitution (for U.S. beef) because it’s a different product, and it’s working, because it’s a very good product, and it’s now sufficiently visible to be developing business by itself.

“Three years ago it was difficult to say. How do you market a product that is totally invisible? Today enough noise has been made, and enough business has been made that every importer is aware of the product.” end_mark

PHOTOS:

TOP RIGHT: American franchise advertising and beef promotions are hitting the streets of Russia, where U.S. beef is staging greater growth in exports.

TOP LEFT: A promotional event showcasing U.S. beef products in a retail setting in Egypt.

MIDDLE RIGHT: Chefs works with American beef during a promotional and marketing event in Vladivostok, Russia.

MIDDLE LEFT: John Brook, regional director for the U.S. Meat Export Federation, specializes in export marketing across Europe, the Middle East and Russia. The USMEF is a contracted marketer for the Beef Checkoff.

-- Photos courtesy of the Cattlemen's Beef Board.

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