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Agricultural News

Red Meat Exports Deliver Excellent Returns for U.S. Corn Producers- USMEF

Sat, 04 Jun 2016 07:07:54 CDT

Red Meat Exports Deliver Excellent Returns for U.S. Corn Producers- USMEF The U.S. Meat Export Federation (USMEF) commissioned a study aimed at quantifying the value delivered to U.S. corn producers through exports of beef, pork and lamb. The independent study was conducted by World Perspectives, a leading agricultural consulting firm. Key findings were unveiled at the USMEF Board of Directors Meeting and Product Showcase, held May 25-27 in St. Louis.

“USMEF receives outstanding support from the feedgrain and oilseed industries, because producers from these sectors understand the importance of a healthy U.S. livestock industry to their bottom line,” said Philip Seng, USMEF President and CEO. “But it is important that we provide specific data on the return these producers receive from their investment in red meat exports, and this study includes exactly that type of information.”

Findings from the study include:

• On a per-head basis, 800-pound calves fed to 1,360 pounds each consume 35 bushels of corn and 806 pounds of distiller’s dried grains with solubles (DDGS).

• Each 12-pound pig finished to 284 pounds consumes 11 bushels of corn, 37 pounds of DDGS and 136 pounds of soybean meal.

• World Perspectives analyzed feed rations and U.S. livestock production practices to establish feed use and then used beef and pork export data to determine the amount of consumption attributable to red meat exports, finding that 2015 exports accounted for:
? 355 million bushels (or 2.1 million acres) of corn
? $1.3 billion in value to corn
? 1.48 million tons of DDGS (169 million bushel equivalent)
? $205.4 million in value to DDGS
? 11.7 million tons (or 3.1 million acres) of combined corn and DDGS fed

“When you look at 2015, it was not a great year for U.S. meat exports, and yet beef and pork exports from the U.S. still brought $1.3 billion to the corn sector,” explained Dave Juday, World Perspectives senior analyst. “Looking back at last year, if there were no red meat exports at all and that corn was added to carryover stocks, instead of a season average annual price of $3.60 per bushel, the price would have been about $3.15 per bushel without the contribution from meat exports. That’s a loss of 45 cents per bushel, which would have amounted to about $6 billion to the corn industry last year.”

The livestock industry’s utilization of DDGS was also a key focus of the study because it plays such an important role in the viability of ethanol plants.

“As of two weeks ago, a gross margin for an ethanol mill would have been about 62 cents per gallon,” Juday said. “If you subtract out the value of DDGS, of which meat exports are a big component of the use, and the corn oil, of which livestock feed is also a big component of the use, that margin would have dropped to just 12 cents per gallon. About 5 cents of the per bushel gross revenue for an ethanol mill is tied directly to red meat exports.”

For a specific example of an international marketing activity that provided an excellent return to the corn industry, Juday cited USMEF’s chilled beef initiative in South Korea. He estimated that through value added to the beef chuck, the new exports to Korea resulting from this initiative accounted for 23 million bushels of corn utilization.

“That is just a small segment of the corn utilization represented by our exports to Korea, but it’s an example of how one single initiative can make a big difference in corn use,” he said.

Livestock producers’ breakeven feed costs are also a big factor in growing demand for corn. The study found that a hog producer’s breakeven feed cost was about $73 last year, but would drop to $25 without the ability to export pork. For fed steers, the breakeven feed cost was nearly $273, but it drops to a loss of $5.08 without exports.

Looking ahead, red meat exports’ positive impact on the corn sector looks even stronger. The study projects that indirect exports of corn through red meat exports will grow from 355.5 million bushels in 2015 to 482.4 million bushels in 2025 – an increase of nearly one-third. Indirect exports of DDGS would jump from 1.48 million tons in 2015 to 2.14 million tons in 2025 – a 44 percent increase.

“Over the next 10 years, the value of red meat exports to corn is estimated to be about $16.1 billion,” Juday said. “About 83 percent of U.S. corn is produced by the top 10 corn-growing states. So if you divide that $16.1 billion among the top 10 states, you can see the kind of impact that’s going to have on local economies.”

A video was unveiled at the USMEF Conference- you can watch it by clicking on the PLAY button in the video box below:



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