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Producers can’t wait for profit to
knock on the door; they must seek it out, and according to one
economist, that means now.
“It’s time,” Dan Basse says. “It’s
time that the beef producer think globally and sell his
very-high-quality product overseas.” The president of AgResource
Company, Chicago, says failing to act in the near term will
literally cost a fortune.
“Producers need to be acutely
aware of the export opportunities and the real economic might
those carry,” he says, projecting an 8% boost in trade volume
would raise cattle prices by $9 to $13 per hundredweight (cwt.).
Basse says beef consumption in
the U.S. is at its lowest level in 12 years, but demand around
the world is increasing with population and wealth, from India
to China. Until 1998, the average Chinese person made less than
$1,000 a year. Today, it’s $3,900 and rising.
“When you go from dirt poor to a
little better than just poor, you want more diet diversity,”
notes Alex Avery, director of research at the Hudson Institute.
“That means grain diversity, fried foods, then meat, milk and
eggs. Dietary improvement is a consistent relationship with
rising affluence.”
The two trade analysts were speakers at the November Feeding
Quality Forums, co-sponsored by Certified Angus Beef LLC (CAB),
Pfizer Animal Health, Land O’ Lakes Purina Feed LLC and Feedlot
magazine at Garden City, Kan., and South Sioux City, Neb.
CAB international director Geof
Bednar shares that optimism while noting several obstacles.
“Global trade is probably the biggest opportunity for the beef
industry,” he says. “But the really difficult part of that
equation is gaining the access we need to get into those
markets.”
Although China’s borders are currently closed to U.S. meat,
Bednar says it’s an important border for producers and beef
marketers to watch along with other Asian trade doors.
“As soon as China opens up, it will be a very significant market
for the beef industry and for CAB,” he says.
The world’s largest branded beef
company has found its way into other Asian markets. South Korean
sales set a record in 2009 at 6 million pounds, and although
sales to Japan are slowly rebounding from the 2003 trade
disruptions, CAB didn’t waste time finding other markets to fill
the gaps. By expanding efforts in Taiwan, Vietnam and Hong Kong,
the brand has reached countries that are open and hungry for
high-quality beef.
“Our brand is able to withstand
more turmoil from an economic standpoint verses commodity beef,”
Bednar says. “That’s because of the relationships we build
through licensing and the way we go to the market, let alone the
quality level.”
CAB-licensed distributors sell
product in more than 60 countries, through a growing network of
licensed partners in foodservice and retail. New licensee Wilson
International is a leading meat distributor in Hong Kong, which,
although part of China for more than a decade, has remained a
free trade zone.
“Hong Kong has been gaining
considerable momentum in our markets,” Bednar says. “But a key
fact there is that Wilson International also has five business
units in five major other Chinese cities. So that’s positioning
us well, ready if China’s markets ever open up, too.”
Meat demand in Hong Kong has
risen more quickly than in other Chinese districts, Avery says.
“Hong Kong is very wealthy in comparison to the whole of China,”
he points out. “Compared to their mainland contemporaries, the
average Hong Kong person eats twice as much pork, four times as
much poultry and four times as much beef.”
Demand is about more than
numbers, of course.
“As we think about global
marketing, we also have to start thinking about the customers
and their position in being from a country that is not a ‘net
food producer.’ That makes them much more interested in where
food comes,” Bednar says.
Asian consumers in particular
are more interested in a “story” behind their food, something
that Bednar says the Certified Angus Beef ® (CAB®) brand
provides. “Japan and Korea imagine the U.S. beef industry as a
factory industry. They just can’t image the rancher back in Iowa
or wherever it might be,” he says. “To get the most out of these
markets, we have to tell our production story. That’s an
advantage we have over commodity.”
Basse says it will take a focus
on opening the doors, followed by intense consumer marketing
campaigns to fully realize the economic potential of
international trade.
“We must have people thinking
globally and talking about the advantages we have relative to
other countries that are trying to sell beef,” he says. “We have
to tell the world’s consumers about the safety and quality of
U.S. beef.”
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