AgriTalk: Meat Exports a Bright Spot in Past Year

U.S. meat exports have been a bright spot for the ag industry in the last year, said host Chip Flory on AgriTalk. To dig deeper into this, he spoke with Dan Halstrom, CEO of the U.S. Meat Export Federation (USMEF).

Halstrom had just returned from the GulFood show in Dubai, which he notes is one of the largest food shows in the world with more than 100,000 visitors.   

The potential there is for U.S. beef in the Middle East, he said.

“The market in the Middle East is relatively small. But you're looking at markets like the UAE, Kuwait, Oman, Qatar and Saudi Arabia. If you look at them individually, they're all relatively small but they are relatively important,” Halstrom said. “They're growing markets, huge food service markets and Saudi Arabia, in particular, is really interesting because the last two years, they really liberalized their culture. Women can drive now. There are movie theaters open now that weren’t before.”

With that liberalization comes a growing and expanding economy and being able to supply high-quality U.S. beef there is a bright spot, he continues.

And what affect did the Trump administration’s trade deals have on the meat markets, Flory asked.

Halstrom noted that on the beef side, the deal with Korea has grown tremendously, from $500-million, to an almost $2-billion market. For pork, it’s really had a chance to shine in Japan.

“[Japan is] our largest beef and our largest pork market and has been for years—number one value on both beef and pork and totaled about $3.7 billion in sales in 2019. And keep in mind, that was with headwinds,” Halstrom said. “We were still growing even had all these headwinds, we were at a 13% duty disadvantage to the major beef importers into Japan, primarily Australia, but also Canada. And on the pork side, it wasn't as big, but we had roughly 6% to 7% duty disadvantage on processed pork and seasoned ground pork, very big volume items. And as of January 1, we're on a level playing field with all these folks.”

Halstrom estimated that growth in the next two years to Japan will total over $4 billion, which is exciting.

In China, the focus is still primarily on pork, Flory noted.

“As we look at the end of last year, we had huge increases in our exports because of the African swine fever (ASF) issue that was predominant throughout China. So we went from a $570-million market in 2019 directly into China to a $1.3-billion market in one year or actually in half a year.

“You have a situation where the world's largest hog herd has been decimated by ASF. You can pick a number, but one of the common numbers is 50% of their herd. So that's roughly 25% of the world's hogs that are no longer there. So, from a supply standpoint, we're in a very short position going forward throughout the next year or two,” Halstrom said.

Aside from the Asian markets, there are more markets in the Pacific Rim that are growth markets for U.S. meat, Flory said.     

“Vietnam is one, but the Philippines on the pork side is a huge opportunity,” Halstrom said. “Indonesia on the beef side is a huge opportunity. These are developing economies, that the middle class is expanding each year, and their desire for higher-quality food stuffs, primarily beef and pork, is growing."

And while the conversation focused a lot on Asia, the passage of the U.S.-Canada-Mexico Agreement (USMCA) was huge, Halstrom said.

“I would put [USMCA] a close second behind Japan in terms of potential benefit for our U.S. beef and pork industries,” he said. “This is another factor of guaranteeing our reputation as a reliable supplier to two of our biggest trading partners in Canada and Mexico.We had zero duty under NAFTA and getting USMCA done virtually guaranteed zero duty going forward for our products.”

For more, check out the audio clip of the show below.