American Farm Bureau Federation Convention January 6, 2002

1
American Farm Bureau Federation
ConventionJanuary 6, 2002

• Phil Seng
• President and CEO
• U.S. Meat Export Federation

2
USMEF Mission Statement
3
USMEF Offices Representatives
St. Petersburg
London
Denver
Moscow
Tokyo
Seoul
Osaka
Beirut
Monterrey
Mexico City
Shanghai
Taipei
Guangzhou
Caracas
Hong Kong
Singapore
Sao Paulo
4
Membership Sectors

• Packer/Processor Purveyor Trader
• Beef/Veal Producing Feeding
• Pork Producing Feeding
• Lamb Producing Feeding
• Feedgrain Producing
• Oilseed Producing
• Farm Organizations
• Agribusiness/Service Organizations

5
Global Strategic Priorities

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

6
USMEF Activities

• Trade Sector
• Trade Servicing and Education
• Account Development
• Trade Communication
• Trade Shows
• Trade Teams
• Seminars

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USMEF Activities

• HRI Sector
• Menu Promotions
• Chefs Seminars
• Chefs Teams
• HRI Seminars
• American Beef Club
• Point of Sale Materials

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USMEF Activities

• Retail Sector
• Retail Promotion
• Retail Seminars
• Retail Teams
• Merchandising Contests
• Point of Sale Materials

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USMEF Activities

• Consumer Sector
• Public Relations Activities
• Consumer Cooking Schools/Contests
• Media Teams
• Image Development
• Consumer Advertising
• Point of Sale Materials

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Record 2000 Beef/BVM Exports

• U.S. exports reached 1,237,000 MT in 2000 an
  increase of 29 from 1996.
• Valued at 3.6 billion in 2000.
• Growth in 2000 driven by steady expansion of
  exports to Japan and Mexico and a 42 increase in
  exports to Korea.

U.S. Beef BVM Exports 000 MT
U.S. Department of Commerce/Trade Census Bureau
11
Distribution of Beef/BVM Exports 2000
(Volume)
U.S. Department of Commerce/Trade Census Bureau
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Beef/BVM Export Forecasts
1,517K MT in 2005
Growth to 2005 280K MT (23)
USMEF
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Where Is The Growth?
Market Growth as a Percent of Total 280K MT Growth
USMEF
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Distribution of Exports
USMEF Beef Beef Variety Meats, Forecast 2005
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Exports As Percent Of Production
USMEF, Beef/BVM Exports As Percent of Domestic
Production
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U.S. Pork Exports At Record Levels

• U.S. exports reached 569,000 MT in 2000 an
  increase of 38 from 1996.
• Valued at 1.3 billion in 2000.
• Growth in 2000 driven by steady expansion of
  exports to Japan and a 60 increase in exports to
  Mexico.

U.S. Pork PVM Exports 2000 1,000 MT
U.S. Department of Commerce/Trade Census Bureau
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Distribution of Exports
Exports By Value Volume Percent

• Japan is our 1 export market with Mexico at 2.
• Japan accounted for 58 of total U.S. pork
  exports on a value basis 37 on a volume basis.
  
• The top 3 markets accounted for 86 of total
  value and 78 of total volume.

Percent
U.S. Department of Commerce/Trade Census Bureau
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Pork/PVM Export Forecasts
904K MT in 2005
Growth to 2005 335K MT (60)
USMEF
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Where is the Growth?
Market Growth as a Percent of 335K MT Total Growth
USMEF
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Distribution Of Exports
USMEF Pork Pork Variety Meats, Forecast 2005
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Exports As Percent Of Production
USMEF, Pork/PVM Exports As Percent of Domestic
Production
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Comments from USDA

• Expanding high-value meat export sales in the
  future benefits both processors and livestock
  producers, expands economic activity and expands
  the demand base for both grains and oilseeds.
  USDA Food and Agriculture Policy- Taking Stock
  in a New Century
• Corn used in meat exports 18 of corn exports,
  soybeans 8
• Chief Economist, USDA

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Feedgrains Exported Via Red Meat
Million bushels
Cattle Fax, USMEF
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Soybeans Exported Via Red Meat
Million bushels
Cattle Fax, USMEF
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Feedgrain/Soybean Export Value
Million US
Cattle Fax, USMEF
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Beef/BVM Exports 2001
Jan-Oct of 2001 vs. 2000 Percentage Change
U.S. Department of Commerce/Trade Census Bureau
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Pork/Pork Exports 2001
Jan-Oct of 2001 vs. 2000 Percentage Change
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BSE In JapanImpacts On U.S. Agriculture
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Mad Cow Disease Hits Japan

• September 10th -- Japans MAFF released
  information concerning the detection of mad cow
  disease in a dairy cow. Since then the 2nd and
  3rd cases have been announced.
• Reacting to consumer fears, MAFF moved to
  implement a new scheme to test every cow
  slaughtered for human consumption. Ministry
  officials declared Japanese beef the safest in
  the world casting suspicion on the safety of
  imported beef.

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On The Consumer Front

• Articles are being placed in increasing frequency
  in Japanese consumer publications stating
• All meat is risky.
• Mad cow has landed be careful about hamburger
  steaks produced by foreign countries.
• An Asahi Shimbun newspaper survey found that 89
  of consumers were very or somewhat concerned
  about BSE, 34 said they ate beef less often and
  25 have stopped eating beef.

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Beef Removed From School Lunch

• Within a week of the announcement by MAFF, 10,600
  (36) schools withdrew beef from their lunch
  menus. This number increased to 16,000 (55) by
  September 28th.

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Market Impact
Channel SalesAs A of Year-Ago Sales

• Total beef demand has plummeted from year ago
  levels.
• Little distinction between imported and domestic
  beef.
• Japan imports 70 of its total beef needs 50
  of which comes from the U.S.
• Recent increases at retail stem from severe price
  discounting.

HRI
Retail
Weeks Following BSE Announcement
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Why Does This Matter?

• Japan is the largest export market for U.S. beef
  and beef variety meats -- 44 of the industrys
  total exports by volume and 51 on a value basis
  -- 1.8 billion in 2000.
• With beef exports to Japan off by about 50, the
  U.S. beef industry is losing 80 million each
  month.
• Industry economists estimate that a 50 reduction
  in Japan exports for one year would negatively
  impact fed cattle prices by 2.50 per cwt.
  Short-term, it is thought the impact could run as
  high as 3.50 to 4.00 per cwt.

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Beef Export Forecast Impact
(MT)
USMEF Estimate
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Impact Grain/Oilseeds Producers

• More than 200 million bushels of corn and 9
  million bushels of soybeans were exported through
  beef in 2000
• A 50 drop in beef exports to Japan reduces
  utilization of corn by 44 million bushels and
  soybeans by 2 million bushels
• Lost value exceeds 100 million per year

Source Cattle Fax, USMEF research
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Japan Objective

• Reestablish Japanese consumers confidence in
  the safety, healthiness and wholesomeness of beef
  and to rebuild sales of U.S. beef in the retail
  and foodservice sectors.

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Phase I Crisis Management
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Phase I Results

• Anshin campaign launched October 18th.
• 217 retailers covering 5444 outlets
• 4 CVS covering 24,411 outlets
• 70 HRI covering 4,600 outlets
• 33 distributors
• Additional U.S. beef sold in November due to the
  campaign is reported at 2,000 MT.
• According to Nikkei Point of Sale research,
  Anshin participants are recording sales levels
  higher than chains/outlets not participating.

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The Competitions Efforts
Japan ?
? Australia ?
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Key Components Phase II

• Consumer Campaign
• Safety Campaign
• U.S. Beef Promotions
• Evaluation
• Implementation

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World Exports of Beef/BVM
(000 MT)
FAO
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Major Beef/BVM Exporters 2000
FAO, World Trade Atlas (MT)
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U.S. Beef/BVM Market Share
FAO, USMEF Estimate, Global Market Share
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Exports To Meet Global Demand

• Global pork/pvm exports grew 32 between 1996 and
  2000.
• Exports from the E.U., Canada and U.S. accounted
  for 77 of global pork/pvm exports in 2000.
• Exports account for less than 5 of global pork
  consumption

Global Pork/PVM Exports 000 MT
World Trade Atlas
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Major Pork/PVM Exporters 2000
FAO, World Trade Atlas, USDA (MT)
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U.S. Global Market Share
FAO, USMEF Estimate