June 1, 2005
By Lisa White
Despite the many challenges over the last couple of years, experts predict a resurgence of U.S. meat and poultry exports.
U.S. beef has had to contend with bovine spongiform encephalopathy (BSE). In the case of poultry, it has been outbreaks of avian influenza (AI) or ‘bird flu’ that shut many doors for American product. Despite these challenges, and the increasing red tape meat and poultry suppliers need to navigate through in each country, exports are on the rise.
“We are strictly in the pork business, so issues with BSE and the avian flu have helped us,” says Gary Kohake, vice president of sales and marketing, international, at Farmland Foods, Kansas City, MO. “There haven’t been many border issues with pork recently. Everyone in this business has enjoyed an increase in exports.”
China, Taiwan, and Mexico typically export pork by-products, including livers, kidneys, and feet, says Kohake.
“In Japan, Mexico, and Canada it’s chilled and frozen pork,” he adds.
Tom Bedell, president of Sierra International, a division of Sierra Meat Co., Reno, NV, confirms that meat exports are beginning to pick up.
“The markets are starting to rebound from the border closings [due to the BSE outbreak], which devastated a multi-billion dollar industry. But we will have to re-invent the wheel with beef exports. Currently, we have Argentina and Brazil filling the U.S. void from us vacating the market. There are lots of challenges and also lots of rewards,” says Bedell.
Sierra International exports beef, lamb, pork, and veal, in addition to gourmet products like caviar, foie gras, Kobe beef, quail eggs, alligator, crocodile, and buffalo, to China, Taiwan, the Philippines, and Indonesia.
“When the borders re-open, we will export to Vietnam, Japan, Korea, Hong Kong, Thailand, Malaysia, and Singapore,” he says.
U.S. poultry exports also are enjoying a strong business, processors say.
“The market is good right now,” says Dan Emery, vice president of marketing at Pittsburg, TX-based Pilgrim’s Pride. The company exports turkey and chicken products to 72 countries, with most in Eastern Europe and Asia. “Our top exports are chicken-leg quarters and turkey by-products, such as tails, skin, de-boned meat, and thighs.”
“Business is real good,” confirms Mark McLemore, acting director of commodity sales for OK Foods, a poultry processor based in Fort Smith, AR. “We export everywhere, but mainly to China, Russia, and Mexico. Leg quarters, paws, and wing tips are our biggest sellers [to these countries].”
Recent developments spawn optimism
Further evidence of optimism is Taiwan’s recent reopening of its borders to U.S. beef after a 16-month ban. In December 2003, after one case of BSE was found in a Canadian-born dairy cow located in Washington State, Taiwan closed its borders to U.S. beef. An April 7, 2005, agreement between the United States and Taiwan reopened the borders on April 16 to U.S. boneless beef from cattle 30 months of age or under with total specific-risk material (SRM) removal, relays the Denver, CO-based U.S. Meat Export Federation (USMEF), a nonprofit trade association working to create new opportunities and develop existing international markets for U.S. beef, pork, lamb, and veal. This only includes beef that originates from USDA-inspected and approved slaughter and processing facilities specified by the Department of Health in Taiwan.
In 2003, the United States exported $76.5 million worth of beef and beef variety meat to Taiwan, relays the USMEF. Boneless beef, now eligible for export, accounted for $56.8 million, or 74 percent of total U.S. beef exports to Taiwan. U.S. beef and beef variety meat exports to Taiwan totaled 19,184 metric tons (mt) (chilled and frozen) in 2003, with boneless beef accounting for 66 percent of the total.
Joe Schuele, director, trade media for the National Cattleman’s Beef Association (NCBA) in Denver, CO, says, prior to December, 2003, Japan was the top export market for U.S. beef.
“Presently, the top market is Mexico,” he says, adding that, under the NAFTA [North American Free Trade Agreement] terms, Mexico only accepts beef products from the U.S. that we accept from Canada. “Presently, this only includes boneless boxed beef from cattle less than thirty months old. If and when Japan reopens to U.S. beef, it will likely only be for this same type or, as was recently proposed, cattle under twenty-one months of age.”
Although BSE has caused beef exports to decrease far below 2003 amounts, Schuele says this is changing. “Export markets have been steadily reopening and growing over the past seventeen months, but only about thirty-five to forty percent of our previous export market share has been re-captured,” he notes.
Like the beef industry, the poultry industry had to contend with its share of problems due to AI, a highly pathogenic virus that many fear will lead to a pandemic. This disease has devastated flocks in Vietnam, and, subsequently, affected poultry exports to a number of countries in Southeast Asia.
U.S. poultry companies recently shipped nearly 100,000 pounds of frozen chicken leg quarters to Vietnam as part of a humanitarian gesture, relays the Stone Mountain, GA-based USA Poultry and Egg Export Council (USAPEEC), a non-profit, industry-sponsored trade organization dedicated to increasing exports of U.S. poultry and egg food products in all foreign markets. The products were sold at auction in May to generate funds to help the Vietnam Poultry Association create an educational campaign aimed at helping area poultry farmers curb the spread of AI.
“In 2004, U.S. chicken export volume was down by three percent, but up by sixteen percent in value. It was an odd year, however, because of the AI situation in the U.S. and worldwide,” says Toby Moore, vice president of communications for USAPEEC. “At one point, nearly sixty countries had total or partial bans on U.S. poultry, including the bigger markets of China and Korea. China’s ban lasted nearly a year, while Korea’s lasted about sixteen months,” he says.
Although first quarter 2005 data shows an increase in poultry exports across the board, competition also is increasing. “This is mainly from Brazil, which has a lower cost of production than the U.S.,” says Moore.
In general, most of the chicken exported to Russia and other non-Asian countries is in the form of bulk-packed, chicken-leg quarters, says Moore.
“For Asia, we export lots of wing tips, wings, chicken paws, and feet. For value-added product, most goes to affluent markets, including Canada and the Caribbean,” he explains.
With turkey, most exports from the U.S. are of mechanically separated turkey meat (MST), and boneless, skinless thigh meat.
“We also export commodity products, such as turkey tails, drums, wings, skin, and testicles. We’ve recently been promoting deli items in the Caribbean and Central America, but this is a limited market,” says Moore.
Turkey parts, especially dark meat, total 97 percent of products going overseas. “Mexico, the industry’s largest customer, makes up more than 50 percent of the entire U.S. turkey export market,” says Sherrie Rosenblatt, who handles marketing and communications for the National Turkey Federation (NTF), based in Washington, D.C. “Between 2002 and 2003, this market grew from 84,500 metric tons to 110,000 metric tons,” she says.
Aside from BSE and AI, there are a number of other challenges facing exports of U.S. meat and poultry.
Tracey Zarlengo, USMEF’s marketing manager, says the main obstacles facing beef and pork exports are the perception that U.S. red meat is too expensive, questions over food safety, competition from local and third country red meat suppliers, and the inability to develop standardized trading principles.
There also have been problems with equipment shortages.
“Because of the volume of pork moving overseas, there are issues with the availability of refrigerated containers,” says Farmland Foods’ Kohake. “There also are logistical challenges of getting the meat to the marketplace on time, especially cargo going east to Romania and Russia. This is because a lot of containers are being used in the Gulf War, and break bulk rates are expensive. Poultry people are using containers, as well.”
As pork exports have increased, getting the correct products to customers on a timely basis with the right documents has been a challenge.
“Some new markets have opened up, such as Australia, which has bought pork from Canada and the U.S.,” says Kohake. “And in China, there is a labeling challenge. They want an inner label in pork boxes to keep illegal European pork from being re-boxed. This means we need to produce inventory specifically for the Chinese market.”
Moore at USAPEEC says that in addition to AI issues, there are a variety of other challenges facing poultry exporters.
“Trade barriers in many countries, environmental issues, religious issues, perceived human health issues, free-trade agreements currently under negotiation such as CAFTA [Central American Free Trade Agreement], and the Doha Round of the WTO [international trade negotiations] each has had an impact on trade,” he says.
Processors say navigating each country’s regulations and import requirements can be the biggest challenge. “How to close the deal and find the right distribution partner in Asia is always a challenge,” says Bedell at Sierra International.
He advises companies that are considering meat exports to first determine what the requirements are financially and time-wise, in addition to logistics, banking requirements, USDA requirements, and the laws and tariffs of each importing country.
“Do your homework, and don’t just chase the sale. Exporters need to dot their ‘i’s’ and cross their ‘t’s’,” he says.
Because regulations are always changing, along with the stability of many countries, Emery at Pilgrim’s Pride recommends that exporters seek out stable areas to do business in. “Keep in touch with what the regulations are and the pending regulations,” he says.
“Don’t put too much stock in exports because there are always flow disruptions. It can be very unpredictable,” says OK Foods’ McLemore.
Kohake at Farmland Foods agrees that there are many situations that can happen abruptly when exporting.
“These include currency issues, border changes, etc. Exporters need to be very flexible,” he says. “You first need to decide how you want to sell your product, whether it be direct, through a third party, or by transferring ownership.”
Many agree that the future of meat and poultry exports is bright. Zarlengo at USMEF predicts that with the globalization of food and livestock products, combined with population and income growth, Asia and Latin America will offer the most opportunity for poultry, pork, and beef exports.
USMEF projects U.S. beef exports to Taiwan alone to reach 8,000 mt by year-end, with plans to expand exports of bone-in short ribs, which accounted for up to 35 percent of U.S. exports in 2003.
“As developing countries become industrialized and individual wealth/affluence grows within these countries, their populations will transition from a carbohydrate [beans/rice]- based diet to protein-based. Further, as worldwide population increases and per capita incomes increase simultaneously, the red meat market will become a supply-driven market. Countries with available supplies of protein sources, like the U.S., should expect to see continuing increases in exports,” says Zarlengo.
Moore at USAPEEC says, overall, poultry consumption worldwide is increasing.
“The U.S. is still the largest producer of poultry in the world. We see a bright future for exports. Growth may not be as rapid as it was during the 1990s, but we expect it to be steady,” he says.
He further predicts that Russia and China will offer the greatest opportunity for U.S. chicken exports, while Mexico and Canada will take the lead with turkey.
“Leg quarters will continue to be popular in Russia, and exports of chicken paws, wings, and leg quarters will grow in China. Also, Mexico will demand more MST and ingredients. We also are doing a lot of work promoting our products in Africa because there is a lot of potential there. It won’t come quickly or easily, as there are infrastructure and political barriers to overcome,” Moore notes.
Rosenblatt at NTF sees Central American markets offering the greatest export opportunity for the turkey segment due to CAFTA.
“U.S. turkey exports to the five CAFTA countries – Guatemala, Honduras, El Salvador/Nicaragua, Costa Rica, and the Dominican Republic, totaled more than $8.1 million in 2004, up from $5.9 million in 2003,” she says. “Exports are critical to the growth of the U.S. turkey industry, and the CAFTA nations should prove to be a valuable market, with plenty of room for expansion in the near future.”
Because turkey consumption has been relatively flat in the U.S. for more than a decade, Rosenblatt says industry growth is likely to depend on exports.
“The process of opening markets to U.S. product by reducing and eliminating tariffs has gained some momentum in recent years, and that process needs to continue,” she says. “Free and open trade is good for agriculture, in general, and our industry, in particular. The year before NAFTA was signed, we were exporting less than thirty-thousand metric tons of poultry to Mexico. Exports have increased almost four-fold since then and, today, we are exporting about one-hundred-and-ten thousand metric tons.” NP
Lisa White is a freelance writer based in Illinois.