Beef industry pockets $277 a head from beef exports
Cheyenne – Greg Hanes, assistant vice president of international marketing at the U.S. Meat Export Federation (USMEF), recently asked a room full of ranchers how many of them export the beef they produce. Only a handful of ranchers, in a room of more than 300, raised their hand.
“All of us should be raising our hands,” he told them. “Whether they realize it or not, producers are all exporting beef internationally.”
“Certain cuts and items of beef are 90 to 95 percent exported,” he said.
The beef industry is pocketing an extra $277 a head each year by exporting some of the beef cuts that aren’t readily utilized in the U.S., Hanes told ranchers during the Range Beef Cow Symposium in Cheyenne.
“Beef exports are expected to exceed $7 billion this year. We only export about 13 percent of the beef we produce in the U.S.,” he said. “There is a lot of room for growth.”
The goal of the USMEF is to access international markets for the U.S.
“Once we have access to those markets, we promote beef so restaurants, food service, consumers and buyers will purchase our product rather than their domestic product or product from the competition,” he said. “We accomplish this through marketing, the teams we have here and technical access.”
USMEF has offices in 20 locations throughout the world. Those offices cover activities in 90 to 100 different countries at any one time.
“We work globally to find the best product for those markets, and where we can get the most value back above what we could sell that product for here,” he said.
“Each market has its own culture and style. It is our job to show them how to use U.S. beef in these different styles to convince them to buy more of our beef,” he said.
With the quality of beef produced in the U.S., Hanes sees exports increasing steadily at four to five percent a year.
“We are currently exporting over 1.45 billion metric tons, and most of it goes overseas. A lot of our exports are products we don’t normally eat here,” he explains. “Our biggest markets are Japan, Mexico, South Korea, Canada, China, Hong Kong, the Middle East and Taiwan.”
“Japan and Korea pay high premiums for beef we don’t eat here. These markets are key and important to us,” he stated.
The key to growing the market has been exporting cuts that other countries will pay a premium for, like chuck rolls, short plates, skirts and variety meats.
“We export 95 percent of our beef liver to Egypt and South Africa,” he explained.
Beef tongue is shipped to Japan, where it can demand more than six dollars a pound, compared to $1.50 to two dollars a pound in the U.S. retail market.
“Just the tongue adds almost $13 of that $277,” he said. “Short plates add another $28 a head.”
Japan contributes $77 a head to that $277 of extra value, while Korea adds $45 a head.
At one time, the U.S. would grind cuts like short plates and chuck rolls into hamburger for retail establishments. Now, those cuts are exported to countries that will pay a premium for them, creating more value, Hanes said. In turn, the U.S. imports lower-value lean trimmings from countries like Australia.
“We mix their lean trimmings with our fat trimmings to make hamburger patties for restaurants like McDonalds and Burger King,” he said. “It is a win-win situation for us.”
Supply and demand
Hanes says the global beef supply hasn’t changed much in the last 11 years.
“What we have seen is a huge increase in demand for our product,” he explained. “With 96 percent of the world’s population and a large percentage of the middle class population outside the U.S., there is a huge potential for the beef industry to expand their export market,” he said.
By 2030, Hanes says 70 percent of the world’s middle class population will live outside the U.S.
In fact, the U.S. is already taking steps to provide beef for these markets.
“Both last year and this year, the U.S. was the leader in supply growth. We are ramping up production to take advantage of this, and we are well-positioned to do so,” he said. “Brazil, India and Australia are our biggest competitors in the export market, but the U.S. has a distinct advantage with our grain-fed beef because of the marbling and quality we can produce.”
“Brazil and Australia are big suppliers of grass-fed beef, but they can’t compete with our grain-fed cattle,” he added.
Gayle Smith is a correspondent for the Wyoming Livestock Roundup. Send comments on this article to firstname.lastname@example.org.