USMEF Virtual Conference Highlights Market Diversification, Logistical Challenges, Trade Policy OutlookMon, 31 May 2021 09:19:56 CDT
Challenges, Trade Policy Outlook
Representing a wide range of agricultural sectors, members of the U.S. Meat Export Federation (USMEF) gathered in a virtual format for the federation's annual Spring Conference, held May 26-27.
USMEF Chair Pat Binger, who heads international sales for Cargill Protein North America, opened the conference by discussing the importance of market diversification in achieving sustained success for U.S. red meat exports.
"The most recent export results - which are from March - provide a great illustration of this," Binger said. "Our leading pork market - China - was down significantly, yet pork exports still set new volume and value records. The leading beef market - Japan - was also down, but beef exports set a new value record and beef muscle cut volume was the largest ever. We know there will always be twists and turns in our top markets, which makes diversification extremely important."
Binger noted that USMEF saw excellent growth potential in Southeast Asia, Central and South America and Africa, and in recent years has committed more staff and resources to these regions. This forward-looking approach has helped expand the global footprint for U.S. pork, beef and lamb.
USMEF President and CEO Dan Halstrom updated members on COVID-related restrictions in key export markets and gave a detailed recap of first quarter export results, which were highlighted by the record March performance. He said 2021 promises to be an outstanding year for red meat exports, but cautioned that the industry continues to face shipping delays and other logistical challenges.
"As optimistic as this report is, it could have been better," Halstrom explained. "Port congestion, shortages of refrigerated containers, a shortage of chassis to move those containers, increasing freight rates and delays in ocean shipments continue to be a major constraint. Not only is this a constraint on shipments, the U.S. may run the risk of jeopardizing our longstanding reputation as a reliable global supplier of U.S. beef and pork."
Halstrom said USMEF is working with industry partners to create greater awareness of these challenges among federal regulators and to propose solutions to improve the flow of outbound cargo.
On trade policy, Halstrom said USMEF is urging the Office of the U.S. Trade Representative (USTR) to conclude free trade agreement negotiations with the United Kingdom and Kenya, which were launched by the Trump administration. He noted that a U.S.-Kenya FTA could serve to unleash much broader trade opportunities in Africa.
Speakers outline trade policy challenges for U.S. agriculture
Trade policy issues were also the focus a keynote address by longtime Washington policy analyst Jim Wiesemeyer, who gave USMEF members an update on the Biden administration’s agricultural policies and priorities and the implications for trade. Wiesemeyer noted that the U.S.-China Phase One Economic and Trade Agreement has delivered significant benefits for U.S. agriculture, but building on Phase One to complete a more comprehensive trade agreement with China could prove difficult. He offered similar thoughts on the U.S.-Japan Trade Agreement, which leveled the playing field for U.S. beef and pork in the Japanese market when it entered into force in 2020. Wiesemeyer said efforts to engage Japan in further trade negotiations could be complicated by Japan's desire for the U.S. to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
The Biden administration's trade agenda was also discussed in a meeting of the USMEF Exporter Committee, where exporters received a trade policy outlook from guest speakers Darci Vetter and Carmen Rottenberg. Now vice chair for agriculture, food and trade for Edelman, Vetter is a former chief agricultural negotiator for USTR. Rottenberg is managing director of Groundswell Strategy, a consulting firm she co-founded after serving as administrator of the USDA Food Safety and Inspection Service. Exporters also received updates on port congestion and container availability, efforts to expand U.S. beef access in South Korea and consultations with Japan on the safeguard threshold for U.S. beef. This safeguard triggered earlier this year, resulting in a 30-day period in which a higher tariff rate was imposed on U.S. beef cuts entering Japan.
Day 1 of the conference also included a meeting of the USMEF Feedgrain and Oilseed Caucus, where members received a spring planting report and grain market outlook from Dr. Sam Funk, Iowa Farm Bureau Federation director of agriculture analytics and research. USMEF Korea Director Jihae Yang discussed opportunities for U.S. beef and pork in Korea's booming e-commerce sector and Joel Haggard, USMEF senior vice president for the Asia Pacific, gave an update on African swine fever in China and highlighted China's rapidly growing appetite for U.S. beef.
The second day of the conference featured meetings of the USMEF Beef and Allied Industries Committee and Pork and Allied Industries Committee. Members received updates on U.S. beef marketing activities in China, Africa and the European Union. On the pork side, USMEF staff discussed emerging opportunities in Central America and Southeast Asia and provided an update on the competitive landscape in Japan. The Pork Committee meeting also included industry updates from the National Pork Board and National Pork Producers Council.
Conference closes with market insights from USMEF international directors
Binger kicked off the closing general session by highlighting the importance of USMEF’s experience in serving the red meat industry in international markets. With a number of new challenges facing the industry over the past year, he said this experience is more important than ever for maintaining and defending the international customer base while working to identify new opportunities.
In introducing four USMEF international directors, Jesse Austin, USMEF vice president for international marketing, echoed what members had heard throughout the two-day meeting: global demand for U.S. red meat is strong, especially through retail and e-commerce, while foodservice recovery is at different stages from market to market. In addition to Haggard and Yang, the panel featured USMEF Japan Director Takemichi Yamashoji and Gerardo Rodriguez, marketing director for Mexico, Central America and the Dominican Republic.
Common themes emerged from the four presentations, including the rapid digitization that is reshaping marketing channels and impacting consumer behavior. The directors also provided updates on COVID-19 case numbers, social restrictions and vaccination rates in their markets. Japan and Korea are currently experiencing new waves of infections with continued restrictions, while Mexico is finally seeing a decline in cases and a gradual loosening of restrictions. Except for international travel, Haggard reported that China is open with no restrictions.
Yang described the e-commerce boom in Korea, with food sales increasing sharply during the past year. Demand is very strong for convenient home meal replacement and restaurant meal replacement products as consumers prize convenience and quality. Yang also discussed the growing importance of eco-friendly messaging in Korea and highlighted recent USMEF marketing initiatives to promote U.S. industry sustainability.
Rodriguez discussed changes in Mexico and Central America, saying that in a short period of time consumers are becoming multi-channel buyers who now typically conduct research prior to purchase. He said lockdowns and social restrictions drove consumers to digital channels and businesses have been racing to adapt. Many companies that formerly operated business-to-business only are now marketing directly to consumers through digital platforms.
Yamashoji explained that e-commerce adoption and sales growth is occurring at a slower rate in Japan. The Japanese culture places great value on in-person experiences and face-to-face interactions, and consumers still prefer to go to a store to see and touch products before purchasing. Social media is booming, however, as consumers regularly seek new ideas on products to purchase, particularly for meal preparation.
Haggard talked about increased digitization and automation in China, noting that the marketing environment has grown much more complex. He pointed to livestreaming and gamification as recent examples of how consumers are seeking immersion into e-commerce “experiences” to buy products. Haggard assured members that USMEF remains focused on the fundamentals of market development, working to build core purchasing and distribution programs with partners in the trade, retail and foodservice sectors, while also adding new skillsets and directly reaching a greater number of consumers.
The next meeting of USMEF members is set for Nov. 10-12 in Carlsbad, California, where the 2021 USMEF Strategic Planning Conference will mark the federation's 45th anniversary.
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