U.S. faces competition in global beef export market

2017-03-18T16:00:00Z U.S. faces competition in global beef export marketBy Benjamin Herrold, Illinois Farmer Today Illinois Farmer Today

The U.S. beef industry has seen some good trends recently, with exports increasing as the American beef supply continues to grow.

“Beef exports rebounded nicely in 2016,” says Joe Schuele, vice president of communications for the U.S. Meat Export Federation. “We were down a bit in 2015 after we had a value record in 2014.”

U.S. beef exports were over $7 billion in 2014.

Scott Brown, ag economist for the University of Missouri, says late 2016 in particular was good for beef exports.

“We ended 2016 with a pretty nice run of beef exports,” he says. “We were up 50 million pounds in both November and December of 2016, relative to a year ago. Some of the export strength was responsible for the price strength.”

Brown is optimistic the good export run will continue in early 2017. But the U.S. faces competition from some key beef-producing countries around the world.

In particular, Australia provides competition for the important Asian markets.

“Those Asian markets are going to be hotly contested this year and next,” Schuele says. “The supplier we go head-to-head with most is Australia, especially in the Asian markets. Australia was very aggressive in those markets when we were absent with BSE. We’ve been gaining back some of that market share.”

Australia flooded the market with beef during a herd liquidation because of drought from 2013-2015.

That led to skyrocketing exports, but at the expense of national herd numbers. Now the country is in its herd rebuilding phase.

“It’s an opportunity for the U.S.,” Schuele says, “but we know Australia will be back.”

He adds that New Zealand is an aggressive marketer in Asia, too, but that country doesn’t have the numbers Australia does.

In South America, Argentina limited exports for a long time to try to keep more beef in the country and keep it affordable, but that led to many Argentinian cattle producers getting out of the business since they couldn’t take advantage of the global market, Schuele says.

“Their numbers dropped, and their industry declined,” he says. “They had been seen as an export powerhouse, but they lost that status. They’re working back now, building back up their cattle numbers. They will be back as a real force in the global marketplace.”

Schuele says Brazil is a large beef producer and “kind of the one supplier left standing to Russia.” Brazil also exports to China. The U.S. mostly competes with Brazil in the Middle East market.

Canada is another big beef producer, but 75 percent of Canadian beef ends up in the U.S., so not much of it competes with U.S. beef in global destinations.

India exports the largest volume of beef of any country in the world, but Schuele says it’s more low-quality beef.

“We don’t see them as a direct competitor for U.S. beef, but it is a factor in the protein market,” he says.

Schuele says international customers enjoy the largely grain-finished product the U.S. offers.

“We really feel like our grain-fed product has unique attributes,” he says. “A lot of our customers enjoy the tenderness and quality.”

Schuele says those customers also view the U.S. as a reliable supplier. About 14 percent of U.S. beef is exported, but the strong domestic demand indicates to international customers that the U.S. will always have strong beef production.

It also helps that U.S. beef’s biggest customers are fairly stable economies.

Brown says exports remain crucial for U.S. beef producers.

“It’s critical today,” he says. “When you think about the kinds of growth in beef supplies coming in 2017 and that we have seen, we need to move product abroad.”

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