Looking Forward The Global Picture

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• Looking Forward - The Global Picture
• presented by
• John Hinners
• U.S. Meat Export Federation

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USMEFs Mission

• To increase the value and profitability
• of the U.S. beef, pork, and lamb industries
• by enhancing demand for their products
• in export markets through a dynamic
• partnership of all stakeholders

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USMEF Offices Representatives
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USMEF Revenue, FY 2001Total 24.5 Million
Packer/Processor/Purveyor/Trader
Agribusiness/Farm
Soybean
Other
Grain
USDA
Hog Producing
Cattle Producing
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Global Strategic Priorities

• Total Carcass Utilization
• Trade Support
• Buyer Education Loyalty
• Market Presence
• Industry/Product Image
• Market Access
• Food Safety

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Market Access

• Secure meaningful, sustained access to new and
  existing export markets.
• Working with government industry to identify
  priorities develop negotiation strategies.
• Examples.
• WTO.
• EU Trans Shipment.
• Korea Country of Origin.
• Mexico Inspection Points.

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Total Carcass Utilization

• Maximize returns for underutilized cuts of beef,
  pork, lamb.
• Outlet for red meat items with limited demand in
  U.S.
• Examples
• Regional Chefs Competition Shoulder clod top
  blade top sirloin butt cap muscle.
• MegaBalls U.S.Meatball introduced into the wet
  markets in January 2000. To date, 671,297 kg
  have been sold worth worth more than 5 million.

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Underutilized Pork CutsAn Opportunity to Add
Value
TOTAL VALUE ADDED 183 MILLION EQUIVALENT TO
1.83 PER HEAD
Prices will vary over time. This example
approximates the value of the average price
spreadbetween domestic and export prices for
these items in 2000. Based on 100 million head
slaughtered.
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Trade Support

• Gather and disseminate market intelligence and
  facilitate contact between U.S. exporters and
  buyers in export markets.
• Includes business development teams, newsletters
  trade shows.

USMEF President CEO Phillip Seng greets Suzanne
K.Hale of the Foreign Agricultural Service, Tokyo
and Howard Wetzel, FAS during USMEF Japan
promotion.
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Market Presence

• Increase the presence of U.S. red meat in the HRI
  and retail sectors.
• Examples
• Natures Balance current campaign in 45 chains
  and 4,000 outlet stores nationwide
• U.S. Hams to the Rescue 61 increase in ham
  sales

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USMEF Retail Promotions Help Build Market Presence
Retail outlets are taking on a new look in
international markets creating new
opportunities for U.S. red meats.
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Buyer Education Loyalty

• Educate buyers in export markets of the
  attributes of U.S. red meat.
• Build buyer loyalty to products exported from the
  U.S.
• Examples
• Chefs contests.
• Product showcases.
• Trade teams.
• Seminars and training courses.

Chefs contests
Trade Teams
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Product Image

• Establish positive images for U.S. beef, pork and
  lamb with consumers in targeted export markets.
• Achieved through advertising, public relations
  consumer events such as cooking schools.

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Reaching Consumers
Positioning U.S. red meat with consumers though
print and television.
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U.S. Pork Exports At Record Levels

• U.S. exports reached 703,000 MT in 2001 an
  increase of 66 from 1996.
• 2001 value exceeds 1.5 billion.
• Exports grew every year since 1991 11 straight
  records
• U.S. now largest exporter of pork and pvm.
• Growth in 2001 driven by 23 growth to Japan and
  solid gains to Mexico, HK/China and Russia.
• FMD a major factor in 2001

U.S. Pork PVM Exports 1,000 MT
U.S. Department of Commerce/Trade Census Bureau
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U.S. Global Market Share
25
20
15
10
5
0
'90
'91
'92
'93
'94
'95
'96
'97
'98
'99
'00
'01
'02
'03
'04
'05
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Distribution of Exports(Pork Pork Variety
Meats for 2001)

• Japan is our 1 export market with Mexico at 2.
• Japan accounted for 55 of total U.S. pork
  exports on a value basis 37 on a volume basis.
  
• The top 3 markets accounted for 84 of total
  value and 76 of total volume.

Exports By Value Volume Percent
Percent
U.S. Department of Commerce/Trade Census Bureau
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Market Performance in 2001
U.S. Exports of Pork and Pork Variety
Meats Jan-Dec of 2001 vs. 2000 Percentage Change
U.S. Department of Commerce/Trade Census Bureau
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Market Performance to March 2002
U.S. Exports of Pork and Pork Variety
Meats Jan-Mar of 2002 vs. 2001 Percentage Change
U.S. Department of Commerce/Trade Census Bureau
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USMEF Export Forecasts2002-2005
921K MT in 2005
Growth from 2002 to 2005 218K MT
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Where is the Growth?
Market Growth as a Percent of 218K MT Total Growth
USMEF Estimate
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Distribution of Exports(Pork Pork Variety
Meats, Forecast 2005)
USMEF Estimate
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Exports as a Percent of Domestic Production
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Exports as a Percent of Domestic Production
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Exports as a Percent of Domestic Production
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Hog Futures
March 10 Russian Ban
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U.S. Exports vs. the Competition
USMEF Estimate
World Trade Atlas
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World Category Management is Changing

• Retailers Analysis Sales and Profit by Menu and
  Specie.
• To decide Product Variation.
• To allocate space at meat case.
• To expand both sales
• and profit.

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World Retail Competition Store Brands

• Retailers are viewing the meat case differently
  today.
• Major retailers are looking to differentiate from
  competitors.
• Todays Retail Trend involves introduction of
  Store Branded meat.
• Change is taking place with Pork, Beef, Chicken
  Groceries.
• Retailers are moving away from price-driven
  commodities.
• The Brand Approach allows retailers to enhance
  level of customer loyalty.

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Store Brand
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Ready To Cook
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Ready To Cook
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RUSSIA
Moscow Wet Market
St Petersburg Supermarket
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Singapore
Wet Market
Retail Store
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China / Taiwan
China Retail Market
Taiwan Wet Market
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Japan Hypermart
37
Mexico Supermarket
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U.S. Exports Projected to Expand
USMEF Forecasts of U.S. Beef Pork
Exports (000 metric tons)
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Factors Driving Growth in U.S. Red Meat Exports

• Rising Per Capita Incomes
• Growing Middle Class
• Changes in Diet
• Declining Self-sufficiency in Leading Import
  Markets
• Expanding Market Access
• USMEF/Industry Marketing Initiatives

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Challenges

• Food Safety Issues.
• Foot Mouth Disease.
• Bovine Spongiform Encephalopathy (BSE).
• Animal identification source verification.
• Increasing global competition
• Australia, Brazil, Canada Denmark for pork.
• Argentina, Australia Canada for beef.
• Non-tariff barriers
• EUs hormone ban.
• Non-recognition of FSIS inspection systems.
• High tariffs.
• Trend in Japan to differentiate.
• Barley Wheat fed vs. corn soy.

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Opportunities Current Future

• Improved market access.
• Global economic growth.
• Current animal health issues are bolstering U.S.
  position as a safe and high quality meat
  supplier.
• Future opportunity will continue to be in the
  Asian regions and Latin America.
• Half the worlds population and GDP growth to
  2005 will occur in these two regions.
• With 80 of U.S. exports already destined for
  these two regions, the U.S. is well positioned
  for future growth.
• China and Russia to become increasingly more
  important to U.S. pork and beef industries.

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U.S. Exports of Feed Grains through Beef and Pork
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U.S. Exports of Soybeans through Beef and Pork
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Call USMEF for Advice Assistance

• U.S. Meat Export Federation-Denver, CO
• 303-623-6328
• www.usmef.org

Your questions are only a phone call away with
nearly 100 USMEF staff and consultants ready to
serve you.