Source:  Tom Johnston, MEATINGPLACE.COM, 6/30/10

Demand for U.S. beef is increasing in foreign markets, but shrinking supplies are forcing prices higher. This is one of the challenges exporters face as they try to market product overseas, Joel Haggard, vice president of the Asia-Pacific region for the U.S. Meat Export Federation, said today in a webinar hosted by the Cattlemen's Beef Board.

"The fact our herd's reducing at a time of [increasing] demand, especially in Asia, is a little bit unfortunate," Haggard said. "When we're talking about a shortage, we're talking about high prices, and then it becomes a question of when people start to back out of the market because prices have risen too high."

South Korea has been the largest growth market for U.S. beef, particularly on the country's appetite for short ribs. Haggard told Meatingplace consumers in that country to date have not shown price sensitivity, but at $4 per pound the price of short ribs is reaching record highs. Consumers in the Philippines, meanwhile, have been more sensitive to rising short rib prices, he said.

USMEF economist Erin Daley added that a shortage of short ribs is expected. In fact, rough calculations show that the United States is exporting "a good chunk if not all of its short rib production." She said USMEF is "working hard" to develop alternative cuts out of the chuck that can suit Korean tastes.

Realities

Despite beef-export growth in South Korea and other Asian markets, Haggard didn't mince words about the reality of the lasting impact that BSE-related bans have had on the industry, with $14 billion in lost trade representing a conservative figure.

Among the challenges is regaining market share from Australia, which he said is ramping up its efforts to maintain the growth it experienced during the absence of U.S. beef. Aussie marketing campaigns, for example, have emphasized the relative lack of traceability capabilities in the United States.

Haggard said he believes that the lack of traceability capabilities in the United States has been a factor in access restrictions and consumer acceptance, especially in China and in Hong Kong, although he said traceability "has not been a deal breaker" in beef trade agreements. Traceability doesn't equate to BSE prevention, he said, but "the point is, countries are saying, 'You've had a case of BSE, do you have traceability?'

"In Hong Kong and China, this will be an area we're going to have to engage on in order to increase our access," Haggard said.