International View - Around the World in 90 Days - Policies Influencing Our Journey - Dr. Travis Arp, Manager of Technical Services, U.S. Meat Export Federation, from the 2015 Animal Agriculture Alliance Stakeholders Summit, The Journey to Extraordinary, May 6 - 7, 2015, Kansas City, MO, USA. More presentations at http://www.trufflemedia.com/agmedia/conference/2015-the-journey-to-extraordinary

1. Factors Influencing
Red Meat Exports
Travis Arp, Ph.D.
Technical Services Manager
U.S. Meat Export Federation

2. The Landscape
Tight
Global
Beef
Supplies
Global
Economic
Growth
Market
Access
Issues
Strong
U.S.
Dollar
Large
2015 Hog
Supplies

3. U.S. Beef Exports
• 2014 beef exports…
– $7.14 billion value (+16%)
– 1.197 MMT (+2%)
– 14% of production
– Added $300.36/hd (+ $55.40)
– Top Markets (value)
• Japan
• Hong Kong
• Mexico
• Canada
• Korea
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
Billions
Value of U.S. Beef Exports
Variety Meats
Beef
-
200
400
600
800
1,000
1,200
1,400
Thousandmetrictons
U.S. Beef & Variety Meat Exports & Forecast

4. U.S. Pork Exports
• 2014 Pork Exports…
– $6.67 billion value (+10%)
– 2.178 MMT (+2%)
– 26.5% of production
– Added $62.45/hd (+ $8.50)
– Top Markets (value)
• Japan
• Mexico
• Canada
• Hong Kong/China
• Korea
-
500
1,000
1,500
2,000
2,500
3,000
Thousandmetrictons
U.S. Pork & Variety Meat Exports & Forecast
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
Billions
Value of U.S. Pork Exports
variety meats
Pork

5. Strong USD Not Good for Exports

6. Shrinking Beef Supplies
-800
-600
-400
-200
0
200
400
600 World
U.S.
Brazil
EU
China
India
Argentina
Australia
Mexico
Pakistan
Russia
Canada
ThousandMetrictons
Forecast Change in Beef Production 2015 - 2014
Source: USDA/FAS April 2015
Decreases expected for our primary competitors

7. MLA’s 2015 Outlook for Australia
• Herd: 26.8 million head, 2 decade low
• Beef production: 2.3 mil mt carcass wt., -11%
• Beef exports: 1.15 mil mt product wt., -11%
• Beef Slaughter: 8.2 million hd, -11%
• Live Cattle Exports: 990,000 hd, -23%

8. U.S. cattle prices remain significantly
higher than prices for other major
exporters

9. One sign of strong demand…
$0
$5
$10
$15
$20
$25
$30
$35
$40
2009 2010 2011 2012 2013 2014
Billions
Nicaragua
Belarus
Mexico
EU28
Argentina
Paraguay
Uruguay
Canada
New Zealand
India
Brazil
U.S.
Australia
Global beef export value has basically
doubled since 2009, to about $37 billion
in 2014, up 18% from 2013
Source: Global Trade Atlas & USMEF estimates

10. China, EU & US > 80% of World’s Pork
0
20,000
40,000
60,000
80,000
100,000
120,000
Thousandmetrictons
Global Pork Production
Others
S. Korea
Japan
Mexico
Philippines
Canada
Vietnam
Russia
Brazil
United States
European Union
China
Source: USDA/FAS

11. 2015 Increases in Production
to be Led by the U.S.
-200
-100
0
100
200
300
400
500
600
700
Thousandmetrictons
Forecast Change in Pork Production 2015 - 2014
+0.4%
-0.2%
+6%
+1% +2% +1% +1.4% +1% +4% +1%+0.2% +3%
Source: USDA/FAS

12. Race to the
bottom for major
exporter prices
-5%
-11%
-15%
-29%
-17% -29%
-25%
+15%
+19%
+20%
+3% +2%
*Vietnam and Philippines prices are for January

13. EU Competition
• China/HK, Japan,
ASEAN and Korea
accounted for
73% of EU export
volume, up from
60% in 2013.
• The increase in
exports to these
markets was
+395,000 mt.
• This alone nearly
offset the 444,000
mt that would
have gone to
Russia.

14. Free Trade Agreements

15. BSE
BSE
BSE
BSE
BSE
BSE
Hormones
Hormones
Hormones
Beta Agonists
Beta Agonists PRT’s
PRT’s
BSE
PRRS
PRRS
TrichinaeTrichinae

16. Animal Health Concerns
• Import restrictions
due to animal disease
– BSE
– PRRS
– Trichinae
– FMD
– ASF
– HPAI
• U.S.: robust animal disease
control system
– World Organization for
Animal Health (OIE)
Standards
• Importance of traceability?
– Lack of national traceability
program affect ability to
regain market access?

17. Bolivia
Morocco
South Africa
Saudi Arabia
China
Brazil
Kenya
AustraliaArgentina
Markets Closed Due to BSE Concerns
Paraguay
Venezuela

18. LT30 Only Markets
Ukraine
South Korea
Thailand
Singapore
Taiwan
Russia (Currently closed)
Japan

19. Market Displacement
44%
51%
5%
76%
12%
12%
52%38%
10%JAPAN
2003 2008 2014
21%
68%
10%
65%14%
21%
55%
35%
10%
KOREA
United States Australia Others

20. SPS Market Access Issues
Hormones
• EU, Russia, China,
Egypt?
• Codex vs. FDA vs.
Precautionary
Principle
Beta Agonists
• EU, Russia, China
• AMS Never Fed
Beta Agonist PVP
• Non-Use vs No-
Residue
PRT’s
• EU, Singapore, Japan
• Food Additive vs.
Processing Aid

21. West Coast Port Situation
• U.S. beef to Asia each month: 48,000 mt &
$330 million
– Chilled: near 12,000 mt & >$100 million per month
• Shelf life for chilled beef = 60 days
– Freezing in transit
• Risk of lost retail shelf space/features as
buyers switch to competitor products
• Added costs

22. Stiff Competition

23. Overall in the year of the Sheep…
BEEF
• Limited global beef supplies will help sustain historically
high prices
• Product will flow to those who are willing and able to pay
• China remains huge market access variable
PORK
• Record hog production drive down domestic prices,
improve competitiveness in global market
• Strong EU pork competition, distorted trade flows
• Russia and limited China opportunity due to market
access

24. Overall in the year of the Sheep…
• Effects of West Coast Ports and COOL?
• Leader in grain fed beef production
– Unique aspects of U.S. beef and pork should
sustain export success
– U.S. is low cost grain fed producer
• World leader in production and efficiency
– How does that effect our global position?
– Animal health, animal welfare, food safety,
sustainability