8/6/2019 IPCVA Charla1
1/23
1
1
Lynn HeinzeVice President InformationU.S. Meat Export Federation
State of the WorldState of the Worlds Beef Markets Beef Market
2007 & Beyond2007 & Beyond
2
USMEFs Mission
To increase the value and profitability
of the U.S. beef, pork, and lamb industries
by enhancing demand for their products
in export markets through a dynamic
partnership of all stakeholders
8/6/2019 IPCVA Charla1
2/23
2
3
USMEF Worldwide
Denver
Mexico City
MoscowBrussels
Beirut
Tokyo
ShanghaiTaipei
Seoul
Singapore
Guangzhou
Monterrey
St. Petersburg
Hong Kong
Beijing
Putting U.S. Meat On The Worlds Table
4
USMEF Membership
Packer/Processor &Purveyor Trader
Beef/Veal Producing &Feeding
Pork Producing &
Feeding Lamb Producing &Feeding
Feedgrain Producing Oilseed Producing Farm Organizations Agribusiness/Service
Organizations
8/6/2019 IPCVA Charla1
3/23
3
5
Topics
Global Beef Production and Trade
Ethanol and Grain Production Outlook
Future Opportunities and Challenges
6
World Population GrowthWorld Population Growth
01
2
3
4
5
6
7
'50 '55 '60 '65 '70 '75 '80 '85 '90 '95 '00
Billion
0123456789
10
'05 '10 '15 '20 '25 '30 '35 '40 '45 '50
Billion
HistoricalHistorical
Projected
Double 1980 by 2050
8/6/2019 IPCVA Charla1
4/23
4
7
Exports have been a growth market for
U.S. Red Meats
0
20
40
60
80
100
120
140
160
'60 '65 '70 '75 '80 '85 '90 '95 '00 '05
millionmt
Rest of World 387%U.S. 58%
Growth in Red Meat Consumption:
Source: USDA
8
Where were going!FAO Red Meat Consumption Estimates
Source: OECD/FAO
0
50
100
150
200
250
millionmetrictons
2006 est 2014 est 2030 est
Pork
Lamb
Beef
+14%
+28%
% change from 2006
An increase of over 25million mt by 2014
8/6/2019 IPCVA Charla1
5/23
5
9
Global Meat Imports
Source: Worldmapper
Mexico
U.K.
Italy
S. Arabia
Russia
S. Korea
HongKong
Japan
10
Global Beef Production and Trade
8/6/2019 IPCVA Charla1
6/23
6
11
Beef Globalization Regional Shifts
16%1.712.610.9Oceania
4%+8242.9225.3TOTAL
-25
44
11.6
-2.4
-21.6
Hd change(million hd)
8.6
82.3
56.6
44.9
28.2
2006Slaughter
(million hd)
-74%33.7Russia
114%38.4Asia
26%45.0S. America
-5%47.3N. America
-43%49.8EU
% change1990
Slaughter(million hd)
Region
Source: USDA/USMEF
12
World Beef Trends
Increasing costs of production
Growing focus on attributes of end product
Consumer driven production and focus onniche marketing
Small but growing demand for natural andorganic beef
Focus on food safety and animal diseaseprevention
Disease testing
8/6/2019 IPCVA Charla1
7/23
7
13
2006 World Beef Production Top 10
10
9
87
6
5
4
3
2
1
Rank
1.37Canada
1.46Russia
2.15Australia2.17Mexico
2.37India
3.1Argentina
7.5China
7.88EU-25
8.85Brazil
11.9U.S.
Total Productionmillion MT (CWE)
Country
Source: USDA
14
2006 World Beef Consumption Top 10
10
9
8
7
6
5
4
3
2
1
Rank
1.0Canada
1.2Japan
1.6India
2.3Russia
2.5Mexico
2.6Argentina
6.9Brazil
7.4China
8.22EU-25
12.8U.S.
Total Consumptionmillion MT (CWE)
Country
Source: USDA
8/6/2019 IPCVA Charla1
8/23
8
15
2006 World Beef Exports Top 10
10
98
7
6
5
4
3
2
1
Rank
52Nicaragua
173Paraguay340Uruguay
485India
370Canada
412New Zealand
444Argentina
656U.S.
1,140Australia
1,503Brazil
Exports 000 MTCountry
Source: Global Trade Atlas and USMEF estimates
16
2006 World Beef Imports- Top 10
10
9
8
7
6
5
4
3
2
1
Rank
98Taiwan
140Philippines
150Canada
190S. Korea
225Egypt
365Mexico
540EU-25
690Japan
840Russia
1,440U.S.
Imports 000 MTCountry
Source: USDA
8/6/2019 IPCVA Charla1
9/23
9
17
Growth Trend ProjectionsBeef Production
0
2000
4000
6000
8000
10000
12000
14000
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15
000MT
U.S.
Brazil
China
EU-25
India
Argentina
Australia
Canada
Mexico
N. Zealand
Source: OECD/FAO
18
Growth Trend ProjectionsBeef Consumption
0
2000
4000
6000
8000
10000
12000
14000
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15
000MT
U.S.
China
Brazil
EU-25
India
Russia
Argentina
Mexico
Japan
Source: OECD/USMEF
8/6/2019 IPCVA Charla1
10/23
10
19
Beef Export Projections
0
500
1,000
1,500
2,000
2,500
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Brazil
Australia
New Zealand
United States
Argentina
Canada
Source: USDA; thousand MT (CWE)
20
Growth Trend Projections Beef Imports
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2005
2007
2009
2011
2013
2015
United States
Russia
Japan
EU-25
Mexico
Egypt
South Korea
Canada
Source: USDA; thousand MT (CWE)
8/6/2019 IPCVA Charla1
11/23
11
21
Major Beef Markets- Grass Fed & Corn Fed
Outside the U.S., themajority of global beefproduction is grass fed
Argentina Growing corn-fed
production and exports
Brazil Growing grain-fed
production and exports
Australia Annual fed growth: 10%
Feedlot capacity >1 mil head
Europe Small percent of production;
Consumed domestically
China Small percent of production;
Consumed domestically
22
Major Beef Markets- Grass Fed & Corn Fed
Preference for grain-fed in Asia andNorth America
Rest of the world
prefers lean grass-fed beef
Grass-fed beef is agrowing nichemarket in the U.S.
8/6/2019 IPCVA Charla1
12/23
12
23
Changing Costs of Production Challenges and tradeoffs between
biofuels and feed markets
Over the past 10 years, U.S. cost ofbeef production (at the feedlot)averaged $0.52/pound of gain
Projected 2007 cost of gain: $0.68-
$0.76An increase of over $75/head in productioncosts (at the feedlot)
24
Grain & Ethanol Outlook
8/6/2019 IPCVA Charla1
13/23
13
25
AS OF: July 2006
In operation
Under construction
Proposed
26
Ethanol and Corn Statistics
111 Current ethanol plants in the U.S.
78 Planned ethanol plants
Currently produce 5.5 billion gallons/year,adding planned plants will double production
54.6 million MT and 20% of 2006/07U.S. corn crop will be used for ethanol
8% of 2006/07 world corn crop used
for U.S. ethanol production
Nearly 70% of 2006/07 world
corn crop used for feed
8/6/2019 IPCVA Charla1
14/23
14
27
Sugar Cane in Brazil
Brazilian Ministry of Agriculture, Livestock, and Food Supply
28
Brazilian Sugar & Ethanol Production
Brazilian Ministry of Agriculture, Livestock, and Food Supply
8/6/2019 IPCVA Charla1
15/23
15
29
Global Biofuels Production
Brazil: #1 producer of ethanol- from sugar cane > 4.5 billiongallons
China: growing production of ethanol from corn 2007 production capacity: 1.66 million mt
EU-25: energy policy encourages growth in biodieselproduction; primarily from rapeseed current biodiesel production: 3.18 million mt Ethanol, primarily from cereals: 0.73 million mt
Many other countries adopting renewable fuel energy policies Australia India Japan Malaysia New Zealand The Philippines Thailand
Competing land uses Corn, oilseed crops, sugar cane, grasslands, crops for cellulostic
ethanol
30
U.S. Ethanol Production(million gallons)
0
500
1000
1500
2000
25003000
3500
4000
4500
5000
Source: Renewable Fuels Assn.
8/6/2019 IPCVA Charla1
16/23
16
31
Corn Used in Ethanol Production
0
500
1000
1500
2000
Source: USDA; million bushels
20% of 2006 U.S. Crop
30% of 2007 U.S. Crop
32
U.S. Corn Projections
0
2,000
4,0006,000
8,000
10,000
12,000
14,000
16,000
2005
/06
2006
/07
2007
/08
2008
/09
2009
/10
2010
/11
2011
/12
2012
/13
2013
/14
2014
/15
2015
/16
2016
/17
Exports
Ethanol
Feed & Resid
Production
Source: USDA; million bushels
8/6/2019 IPCVA Charla1
17/23
17
33
Response to increasing world corn prices:
Argentina Corn Production & Exports
Production+5 mil MT
Exports+4.5 mil MT
34
China Corn Supply and Use
0
20
40
60
80
100
120
140
160
Production
FeedExports
FSISurplus
2004/0
2005/0
2006/0
Source: USDAEthanol
8/6/2019 IPCVA Charla1
18/23
18
35
World Coarse Grains Production
(MT)
0
50
100
150
200
250
300
350
90/91
92/93
94/95
96/97
98/99
00/01
02/03
04/05
est
06/07
08/09
10/11
12/13
14/15
United States
EU-25
China
Brazil
India
Russia
MexicoCanada
Argentina
Australia
U.S.
China
EU-25
Brazil
Source: OECD/FAO
36
World Coarse Grain Net Trade
-40
-20
0
20
40
60
80
00/01 02/03 04/05 06/07 08/09 10/11 12/13 14/15
United States
Argentina
Brazil
China
Korea
Mexico
Japan
Source: OECD/FAO/USDA
8/6/2019 IPCVA Charla1
19/23
19
37
Decreasing Stocks Lead to Higher
Corn Prices
38
Feed Ingredient Prices($/short ton)
0
50
100
150
200
250
300
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006*
2007*
DDGS
CGFSBM
Corn
Source: USDA/USMEF estimates
8/6/2019 IPCVA Charla1
20/23
20
39
Factors Affecting us Now and in the
Future Animal disease
FMD, BSE, AI
Policy: FTAs, DDASPS issues and other barriers to trade
NutritionObesity and hunger
Industry consolidation Animal welfare Environmental issues International institutions
IMS, CODEX, OIE, WHO
40
Consumers are in the drivers seat
Consumer trust
Brands
Sophisticatedmarketplace
Ethical brands andfood with a face
Natural and organicproduction andstandards
Food safety
Nutritional value
Industry image
8/6/2019 IPCVA Charla1
21/23
21
41
International Partnerships Require
Great Citizenship Seminar sponsor to help
educate Mexico consumers onmanaging diabetes and obesity
Nutrition information presentedto young athletes throughsponsoring nutritioncommercials on TV and majorsporting events
Sponsor of a major MothersDay promotion encouragingconsumers to purchase U.S.meat and attend a education
seminar with cookingdemonstrations and a nutritionmessage for 5,000 mothers
Organize cooking workshops atstores throughout Mexicooffering consumers theopportunity to cook and tastered meat in the stores
42
To be Competitive in a ChangingWorld
Focus on advantages:
Diversity, flexibilityof programs, grain-fed, grass-fed,
organic Aggressively pursue
trade and competition
Embrace tradeenhancing policies
Export-mindedmentality
8/6/2019 IPCVA Charla1
22/23
22
43
To be Competitive in a Changing
World
Deliver assurances offood safety to allconsumers
Respond to consumerdemand for value-added specialty
products
44
Summary
We all have theopportunity to defineboth our future and thefuture of our industry.
Adaptation is a key tosurvival.
An industry that cannotbe competitiveinternationally will notbe competitivedomestically.
How well we cooperateHow well we cooperatewill determine how wellwill determine how wellwe compete!we compete!
8/6/2019 IPCVA Charla1
23/23
45
Questions
For more information: www.usmef.org