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8/6/2019 IPCVA Charla1

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1

Lynn HeinzeVice President InformationU.S. Meat Export Federation

State of the WorldState of the Worlds Beef Markets Beef Market

2007 & Beyond2007 & Beyond

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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


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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

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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


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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


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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

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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


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Global Meat Imports

Source: Worldmapper

Mexico

U.K.

Italy

S. Arabia

Russia

S. Korea

HongKong

Japan

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Global Beef Production and Trade


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Beef Globalization Regional Shifts

16%1.712.610.9Oceania

4%+8242.9225.3TOTAL

-25

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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

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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


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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

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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


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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

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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


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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

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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


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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)

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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)


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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

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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.


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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)

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Grain & Ethanol Outlook


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AS OF: July 2006

In operation

Under construction

Proposed

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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


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Sugar Cane in Brazil

Brazilian Ministry of Agriculture, Livestock, and Food Supply

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Brazilian Sugar & Ethanol Production

Brazilian Ministry of Agriculture, Livestock, and Food Supply


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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

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U.S. Ethanol Production(million gallons)

0

500

1000

1500

2000

25003000

3500

4000

4500

5000

Source: Renewable Fuels Assn.


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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

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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


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Response to increasing world corn prices:

Argentina Corn Production & Exports

Production+5 mil MT

Exports+4.5 mil MT

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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


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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

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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


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Decreasing Stocks Lead to Higher

Corn Prices

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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


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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

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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


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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

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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


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To be Competitive in a Changing

World

Deliver assurances offood safety to allconsumers

Respond to consumerdemand for value-added specialty

products

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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!


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Questions

For more information: www.usmef.org

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