Strong Demand in Asian Markets Pushes U.S. Beef Exports to Record Pace

by Greg Hanes, U.S. Meat Export Federation, a contractor to the Beef Checkoff

Summary
International marketing of U.S. beef greatly enhances carcass value and delivers strong returns to U.S. producers. Checkoff-funded marketing activities and ongoing efforts to improve market access are managed by the U.S. Meat Export Federation (USMEF), a contractor to the Beef Checkoff. These efforts helped produce exceptional results in the first six months of 2014, as U.S. beef/beef variety meat exports set a first-half value record of $3.27 billion, up 16 percent from the same period in 2013. Despite lower supplies, export volume was up 8 percent from a year ago to 585,953 metric tons (mt). 

Background
Over the past 10 years, the U.S. industry has made excellent progress in restoring the presence of U.S. beef in Asian markets that closed completely following the December 2003 BSE case. With the exception of China, all major Asian markets have now reopened to U.S. beef, but in some cases market access remains limited by product restrictions and limits on the age of eligible cattle. Despite these obstacles, demand in Asian markets has been very strong and has shown exceptional resiliency during a period of high prices for U.S. beef.     

Discussion
Hong Kong has been an excellent growth market for U.S. beef exports, with first-half results increasing 55 percent in volume (71,876 mt) and 76 percent in value ($492.7 million) from a year ago. For many years, exports to Hong Kong were limited to boneless muscle cuts from cattle less than 30 months of age. This changed in February 2013, when Hong Kong began accepting bone-in cuts and some offal products from under-30-month cattle, and boneless cuts from cattle of all ages. In June of this year, Hong Kong granted full access for U.S. beef, which allowed for the addition of key items such as ground beef and processed beef products.

“Over the past 18 months, the U.S. industry has capitalized on its expanded access to Hong Kong in a number of ways,” said Joel Haggard, USMEF senior vice president for the Asia Pacific. “USMEF has targeted bone-in middle meats to buyers in Hong Kong’s high-end restaurant sector with great success, and creating demand in Hong Kong for U.S. short ribs has made them an even more valuable item on the global market. Removal of the cattle age limit and restrictions on ground beef and processed products is also very beneficial, as this allows USMEF to pursue an expanded range of opportunities in Hong Kong’s rapidly growing foodservice sector.”

Exports to South Korea have also performed extremely well in 2014, with first-half volume increasing 11 percent year-over-year (to 56,478 mt) and value surging by 40 percent to $379.5 million.

“We have made steady progress in Korea in restoring consumer confidence in U.S. beef,” Haggard explained. “While it remains one of the most sensitive markets in the region regarding BSE and other safety-related issues, a far greater percentage of Korean consumers trust the safety of U.S. beef, compared to where we stood just a few years ago.”

One of the strategies that has helped USMEF regain the confidence of Korean consumers is a sharper focus on branded products that offer more detailed information about sourcing and production at the point of sale.

“A growing number of consumers in all markets want to know the ‘story’ behind the products they are buying for their families,” Haggard said. “USMEF certainly found this to be true in Japan, where providing consumers with this information strengthened demand and allowed them to focus on how much they enjoy U.S. beef. We’re now having great success with this strategy in Korea and in markets across Asia.”

Similar results are being seen in Taiwan, where the U.S. industry has recently overcome misperceptions and negative media coverage related to the use of ractopamine in beef production. After a slow start in 2014, exports to Taiwan rebounded nicely in the second quarter to finish the first half of the year 3 percent higher in volume (16,127 mt) and 7 percent higher in value ($132.8 million).

These results are particularly impressive given the current state of Taiwan’s beef market, which has seen a large influx of lower-priced beef from Australia due to its drought-induced herd liquidation. Imports from New Zealand have also increased as suppliers capitalize on lower tariffs gained through New Zealand’s new free trade agreement with Taiwan.

“For frozen beef, we are definitely seeing a more intense level of competition from Australia and New Zealand due to the price advantages they currently enjoy in Taiwan,” Haggard said. “This makes it more important than ever that we clearly differentiate U.S. beef and showcase its unique attributes. We are best able to do that with chilled beef, and especially with high-quality, branded products in which buyers have a high level of confidence and loyalty. That’s the focus that has really helped us maintain strong results in Taiwan.”

U.S. exports to Japan have been mostly steady this year, but this follows an exceptional performance in 2013 in which Japan reclaimed its position as the number one international destination for U.S. beef. In February of that year, Japan lifted its 20-month age limit for eligible U.S. cattle and began accepting products from cattle less than 30 months of age. This helped boost U.S. exports by 54 percent in volume (234,615 mt) and 35 percent in value ($1.4 billion) compared to 2012.

In the first half of this year, U.S. exports to Japan dipped slightly in volume (11,044 mt, -3 percent) but export value was steady at $693.6 million – making Japan the leading value market for U.S. beef. By comparison, first-half exports to Japan were lower for all other major suppliers, including:

 

In terms of import volume, U.S. market share in Japan increased to 38 percent in the first half of 2014, compared to 32 percent during the same period last year. For import value, U.S. market share increased to 43 percent – up from 38 percent in 2013.

Conclusions
Despite product restrictions in many markets and a continued lack of access to China, the U.S. industry continues to successfully grow demand for U.S. beef in Asia. The premiums delivered by Asian markets – for both muscle cuts and variety meat – were a very important factor in pushing U.S. export value per head of fed slaughter to $268 in the first half of 2014, including an all-time monthly record of $299 in June.    

Additional Resources 

Tags: Beef Issues Quarterly, Fall 2014, Issues Updates

October 2, 2014