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| Opening doors opens profit chances |
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U.S. beef exports have had a strong year, again demonstrating the tremendous market potential that lies outside the United States. Sales through September had been roaring before the worldwide financial crisis cooled all industries in all markets.
Despite the ups-and-downs of global markets, increasing foreign trade remains a key to the profitability of U.S. cattlemen – now and in the future.
Exports are critical to cattlemen because today they add about $180 per head to the price we receive for our cattle. Some part of virtually every animal harvested in the United States ends up in a foreign market where consumers pay more for cuts that aren’t too popular in American homes, like livers, intestines and tongues.
The profit equation is pretty simple: $5 a pound overseas vs. 38-cents a pound domestically.
Profitability through exports hasn’t happened by accident. When U.S. export markets closed on Dec. 23, 2003, NCBA made reopening them a top priority. Since then, NCBA has worked tirelessly with government officials, helping prepare them to strongly advocate for market access benefitting all cattlemen.
We knew the process would be long, and at times frustrating; we knew that by following the science and being transparent in our process - not protectionist or unjustifiably critical about the safety of the U.S. beef supply - we would regain access to these markets. That work is paying dividends.
Through August sales to Japan measured in carcass weight were up 50 percent over a year ago. Despite that progress, there’s still a billion dollars in sales we can recapture to be at 2003 levels.
South Korea’s market for U.S. beef, after sputtering through the summer, had just begun to hum before the financial crisis hit. The price of short ribs, a favorite in the Korean market, had increased 35 percent from a year ago, according to the U.S. Meat Export Federation. The chuck cut-out, the price of which is driven largely by export demand, was up 25 percent from a year ago; and August beef exports, valued at $416 million, set an all-time record for monthly sales in any month, led by an all-time monthly high of $150 million to Mexico. This was 50 percent more than the monthly average for 2007.
As all wealth in the cattle industry comes from the consumer, this shows that the global consumer is a part of the demand equation U.S. cattlemen can’t afford to ignore.
The ability to significantly grow our business lies in the developing economies around the world.
Today, the majority of this business is at our borders. Canada and Mexico account for 60 percent of all U.S. beef exports so far this year. Our relationship with Canada and Mexico on beef and cattle trade plays to the strengths of the U.S. industry: We are the most efficient producer of grain-fed beef on the planet. Yes, this trade relationship involves imports of Mexican and Canadian live cattle but the current market structure allows the value to be added on the U.S. side of the border.
That is of enormous benefit to our domestic production. Restricting this trade unquestionably would instigate a trade war with our No. 1 and No. 2 export markets.
NCBA members believe exports are critical to the profitability and viability of the U.S. cattle industry. We must continue to market nutrient-rich beef to our fellow Americans, but we also must offer our superior product to the other 96 percent of the world’s population.
Worldwide, experts say more than one billion people have moved from poverty to the middle class, and as people become more affluent, they want to eat meat. As NCBA president, I want to make sure their No. 1 choice for protein is U.S. beef.
The European Union can’t produce enough beef to meet its needs. Asian consumers are returning to U.S. beef while our North American neighbors have proven how valuable their markets are to our continued profitability.
How can we not take advantage of the tremendous growth opportunity expanded trade presents?
Some say no trade is the best trade. I say U.S. beef producers make the best beef in the world.
U.S.-fed beef is the gold standard around the globe and we deserve to earn our fair share of the world marketplace.
The long-time path of the U.S. beef industry places paramount emphasis on the safety and quality of beef we provide, not only to U.S. consumers but all of our customers around the world. Throughout our long history, NCBA members have fought passionately against any effort to impugn the quality of the beef produced in the United States, question the safety of the U.S. beef system, or place personal opinions above the scientific consensus of every respected body in the world.
To do otherwise just doesn’t make horse sense.
Andy Groseta, president
National Cattlemen’s Beef Assoc. |
| 11/5/2008 |
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