Emerging markets will be an important driver of export activity, because the more global demand for US red meat grows, “…the more you can force the cutout higher which eventually translates into better prognosis for the live price,” said USMEF President Dan Halstrom.
Therefore, maximizing the whole carcass is a key objective for USMEF and its exporter members — which means putting the right cuts into the right markets. In Central and South America, the right cuts so far have been beef variety meats.
“On the beef side, we have tremendous growth — 21 percent up in the region — but we have tremendous growth into Chile, Colombia and Peru,” Halstrom noted. “For example, it’s a huge beef variety meat market; a lot of tripe, a lot of hearts go down to that region of the world.”
On the pork side, Halstrom continued, exports to Colombia advanced 85 percent “…and this is probably a combination of seven or eight different items, but the mainstream items would be boneless picnics, hams, ribs as well as variety meats.”
Latin America and Africa show promise as destinations for US beef and pork exports as economies in those regions begin to stabilize and grow. For example, the regional economy in Latin America and the Caribbean is stabilizing although the recovery has been uneven, the World Bank noted in its report, “Global Economic Prospects: A Fragile Recovery.”
“Growth is expected to be 0.8 percent in 2017 as private consumption strengthens and the contraction in investment eases,” according to the report. Growth in the region is projected to increase 2.1 percent in 2018 as Brazil and other commodity exporters gain momentum, the report noted.
In Africa, where USMEF has been very involved during the last four years, demand for US red meat exports is small, but the pace of growth is quickening.
“On the beef side, to the region, we’ve doubled the volume versus a year ago, and it’s primarily livers and kidneys,” Halstrom said. “On the pork side we’re seeing growth into South Africa and this is primarily primal cuts for further processing.”
Halstrom noted a “definite link” between rising red meat consumption and modernization in the economies of Africa. The World Bank said in its Global Economic Prospects report that economic growth in Sub-Saharan Africa is recovering on “…modestly rising commodity prices, strengthening external demand, and the end of drought in several countries.” Growth in the region is projected to recover to 2.6 percent in 2017 and to strengthen in 2018.
Regaining access to markets in South Africa in early 2016 also has helped. In the first quarter of 2017, South Africa represented the 11th largest volume market for US beef (mostly livers) with a volume of 1,971 metric tons and a value of $1.5 million, according to the Beef Checkoff.
“It took some time, especially the beef side,” Halstrom said. “Once it got going, just like any market, it started to pick up steam fast. I think this is indicative of regions that are very much in a developmental mode,” he added.
Africa as a destination for US red meat export is worth keeping an eye for other reasons, including the region’s demographics: Africa has one of the youngest demographics in the world…and very fast population growth.
“So, you’re going to see some opportunity going forward, not only in South Africa but other regions like Angola, Ghana, Benin,” Halstrom explained. “The outlook is very positive going forward.”
