By Doug Rich
No group was more excited about the positive vote by the House of Representatives for Permanent Normal Trade Relations (PNTR) with China than the one meeting at the Westin Crown Center, in Kansas City, MO.
That is where the U.S. Meat Export Federation (USMEF) was holding a board of directors meeting and International Buyers Conference.
"China is the story of the hour, at this meeting," said Thad Lively, vice president of International Programs for USMEF. "What was at stake were the terms under which we could do business in China. China will join the World Trade Organization (WTO) and would have even without PNTR. Without a positive PNTR vote, we would have been the odd man out."
Phil Seng, president and chief executive officer of USMEF, said he was extremely pleased with the House vote on China. "It will pay tremendous dividends for us." Seng pointed out that when China changes, one-fifth of the world's population is changing. "China is a developing country without a unified infrastructure and a lot of work needs to be done with marketing, packing, transportation and sanitation."
Although this vote will be great for U.S. meat exports, don't expect a big surge in export numbers anytime soon. "There is a lot of product going to China now and has been for a number of years," said Joel Haggard, vice president of the Asia Pacific Region for USMEF. He stated that beef, pork and poultry have been going to China since the early 1990s. Most of that has gone through what Haggard called the "Gray Channel Trade" through the southern portion of China. Hong Kong imported 200,000 tons of variety meats last year, and according to Haggard, 90 to 95% of that amount goes to China. "We won't seed a surge in meat exports to China, but a steady growth. This new agreement is more of a process than an event. China is headed in the right direction--away from tight control and to more individual freedoms."
Variety meats make up the bulk of exports to China at this time, but that will change to more muscle meats as personal incomes rise. Merlyn Carlson, USMEF chairman, said the market for better cuts of meat is in coastal areas, where the people have more money. "There is a market for value added products in coastal areas," he said. "In China, 20% of the people live along coastal areas."
Even though USMEF directors were excited about the China vote, they are concerned with worldwide red meat trade. "The past decade has been tremendous for U.S. red meat exports," said Seng. "Beef exports in 1990 were 500,000 metric tons (MT) and in 1999 we eclipsed 1,151,000 MT, a 127% increase for the decade. Pork exports in 1990 were 150,000 MT. In 1999, we eclipsed 554,000 MT, a 275% increase for the decade."
Taiwan may be the next country to gain membership in the WTO, according to Carlson. "Taiwan and Korea realize they don't need to be as self-sufficient in their food needs as they originally were," he said.
Mexico is a gigantic, well developed market for U.S. red meat, but there are some issues to be resolved. In response to what Mexico perceived as dumping of U.S. beef in their country, they have established. Import duties on beef. These import duties vary from company to company. "It is the political season in Mexico and things become tougher at the border during these times usually," said Lively.
Limiting the number of border crossings could create a bottleneck for meat going in to the Mexican market, according to Homero Recio, vice president for the Western Hemisphere for USMEF. The U.S. exported 114,000 metric tons of pork to Mexico in 1999, making it the second largest export market for pork.
The huge potential for Russia as an export market for red meat from the U.S. has yet to be realized. "We are looking for buyers with money, who have the ability to pay," said Lively. "That has been the problem with Russia. Meat is an important part of their diet in Russia and the government is interested in keeping meat on the market. Poultry has been the main meat protein in Russia in recent years. It is a market with potential, but with heavy competition from the EU." Russia continues to buy beef liver from the U.S. and Poland is a major market for tripe.
The Caribbean and Central American could be markets for quality meat products. The tourist market in the Caribbean demand quality meat for hotel business. Supermarket chains are expanding in Central American and need quality meat products to fill their shelves.
One market that remains closed to U.S. companies is Cuba. Unlike China, there is no pass through or gray market for meat in to Cuba. "We are interested in any sanctioned visits to Cuba," said Recio.
In addition to the discussion of export market, the USMEF meeting was an opportunity to exchange ideas. Dr. Gary Smith, university distinguished professor and holder of the Monfort chair in meat science, at Colorado State University, presented some new ideas in his keynote address.
"I tell the production sector that we will have a future in the red meat industry, but only if we are consumer driven, as opposed to production driven," said Dr. Smith. "We need to assure the consumer of U.S. beef, pork, and lamb that they are receiving a bacteriological and chemically safe, healthful, high quality and palatable meat that was produced without compromising the environment or the animals welfare." This can be accomplished through source verification, producer practice verification and U.S. Department of Agriculture process verification.
"However much we dislike it, we will eventually trace back," said Dr. Smith. "It will become important here." Dr. Smith said this could be accomplished through a passport system, plastic ear tags or DNA tracing.
"The single most important thing we can do to assure that beef is tender, if we are consumer driven, is genetics," said Dr. Smith. "The single worst thing we can do to harm the tenderness of beef is use growth promotants. A production oriented individual will use growth promotants. As we convert to a consumer driven industry, we will reconsider the use of anabolic steroids, because the more aggressively we use them the tougher the beef and the lower the grade."
Exports will continue to be important to U.S. beef, pork and lamb producers. "History shows that trade provides much more long-term benefit to an economy than protectionism," said Seng. "The more successful countries become in the trade arena, the less need for protectionism. What does all this mean for U.S. agriculture? Opportunity, opportunity, opportunity, if we choose to pursue it."