usmef

USMEF Conference Examines Exports, Production, Economic Headwinds

Dan Beef, Cattle, Exports/Imports, Livestock, Pork, U.S. Meat Export Federation (USMEF)

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The U.S. Meat Export Federation (USMEF) held their Strategic Planning Conference this week in Oklahoma City. The event attracted farmers, ranchers, processors and exporters from across the nation.

During the event, it was noted that while U.S. red meat exports will likely set a value record approaching $20 billion this year, the industry faces an array of obstacles related to the sluggish global economy, weakening currencies of key trading partners and lingering effects of the COVID pandemic. Challenges are also mounting on the production side, especially for livestock producers impacted by drought.

According to a USMEF release, keynote speaker for the event was Randy Blach, CEO of CattleFax. He detailed the larger-than-expected contraction of the cattle herd, which helped drive U.S. beef production and exports to record highs in 2022 but will be a significant constraint for U.S. exporters next year. The drought has also heightened production costs for cattle feeders.

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CattleFax CEO Randy Blach was the keynote speaker at the USMEF Strategic Planning Conference in Oklahoma City
Courtesy USMEF

“If you’re putting an animal in a feedyard anywhere in the Central Plains – let’s say Kansas or Oklahoma – your cost to put on a pound of gain is between $1.30 and $1.40,” Blach explained. “We have not seen that historically, not even back in 2008 when we had the ethanol mandate and for a period of time corn was at $8.00 per bushel. This is an interesting time, when the market needs more corn and where it’s needed most, the corn just isn’t there.”

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But Blach also highlighted the remarkable efficiency and sustainability of the U.S. beef industry, which he maintains is well-positioned for success even in this challenging environment.

“Whenever I ask an audience ‘who’s the biggest beef producer in the world?’ – everyone says Brazil because it has 300 million cattle,” Blach said. “But we’re producing more beef than Bazil with only one-third the number of cattle. Why? Because of our high-quality, grain-fed beef. The U.S. has the best carbon footprint of anybody on the list of top beef producers, because of the way our production systems work and the amount of production that we get on a per-head basis.”

Blach added that the U.S. achieved record beef production in 2022 with 30 million fewer cattle than in the 1970s.

“That’s what sustainability is – doing more with less, and doing it better with great animal husbandry,” he said. “And I commend each and every one of you who get up every morning to go feed those cows and calves, or feed those fed cattle. You’re doing a hell of a job – keep it up.”

Blach also extolled the efficiency of America’s corn and soybean producers, noting that it is a critical factor in the global success of the U.S. meat industry.

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“The U.S. is the largest high-quality meat producer on the planet,” he said. “We produce the most beef, the most broiler meat and the third-largest amount of pork in the world. Sometimes it’s easy to forget that we cannot achieve this success without the soybean meal and grain products that those of you in the corn and soybean industries produce. It’s important that we recognize what a critical ingredient you provide for all of these proteins.”

USMEF President and CEO Dan Halstrom gave members an update on year-to-date export results and his outlook for coming months. While challenging times lie ahead, Halstrom highlighted the importance of market diversification in keeping beef exports on a record pace through the first three quarters of 2022. Pork exports are also regaining momentum, surpassing year-ago levels the past two months.

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President and CEO Dan Halstrom updates USMEF members on export results and key trade issues<br>Courtesy USMEF

“Global demand is strong, even record-breaking, despite rising prices,” said Halstrom, “But at what point do international consumers scale back?”

He listed several mounting obstacles for U.S. exports, including global inflation, ongoing supply chain challenges and the strengthening U.S. dollar. As an example, Halstrom noted that devaluation of the Japanese yen has pushed prices for U.S. meat products 30% higher than a year ago in an extremely competitive market.

Market diversification has long been a top priority for USMEF, and Halstrom praised the U.S. industry’s commitment to developing new and emerging markets for red meat exports. He noted that the often-tense U.S.-China relationship underscores the importance of this strategy. Halstrom explained that while China is a major U.S. red meat customer, on pace to purchase $4 billion in U.S. beef and pork this year, the U.S. is not nearly as dependent on China as most other suppliers.

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“Uruguay exports 58% of its beef production to China, New Zealand 44%, Brazil 18% and Australia 14%,” Halstrom said. “But even with our recent growth, just 3% of U.S. beef production is exported to China.”

For pork muscle cuts, just 2.3% of U.S. production currently goes to China. Chile and Brazil ship 17% of their pork muscle cut production to China, while China accounts for 9% of Canada’s production and 6% for the European Union.

Trade barriers often make market diversification more difficult, and Halstrom asked USMEF members to remain vigilant and make their voices heard in Washington.

“Our competitors realize the value of trade and they’re not standing still,” Halstrom said. “Hopefully we can encourage more aggressive action, including getting a USTR chief ag negotiator and USDA undersecretary for trade confirmed soon.”

The USMEF Strategic Planning Conference wraps up today, Nov. 11. The closing business session will include an overview of the Biden administration’s current trade initiatives and election of new USMEF officers.