While the meat export business has faced its share of obstacles as of late, Dan Halstrom is optimistic of where the industry is going.
Halstrom, president and CEO of the U.S. Meat Export Federation, says there is reason for optimism. "We have record production in the U.S. right now, and we also are on track for record exports," he says, in a media conference call on Tuesday prior to the USMEF Strategic Planning Conference in Tucson, Ariz. "Our forecast is for September and the rest of the year to be quite significant and record breaking again. … on the pork side in 2019, we were forecasting a minimum of 10% growth. It could be higher. And for 2020, we're looking at 13% growth. And believe me, I think these are conservative. They could well be higher depending on exactly what happens in some of the key markets later this year."
One of those key markets is Japan, and Halstrom is optimistic that the trade deal with that country will be implemented by early 2020. "The ball is in the Japanese court, but expectations are that the Diet will approve this agreement," he says. "We're very upbeat on the opportunity in Japan as we look at the rest of '19 and into 2020. We get duties on a level playing field with our major competitors: Australia, Europe, Canada, Mexico. We feel like this is really going to enable us to move the needle even further and regain some of that share that's been lost on the pork side and some of the lost opportunity on the beef side."
Halstrom says the U.S. beef industry may benefit from good timing as leveling of the duties playing field coincides with the Australian beef herd being at a relatively low number. "We should be well-positioned to do very well on regaining share on beef in Japan," he says.
Closer to home, Halstrom is encouraged that the U.S.-Mexico-Canada trade agreement will get done, and speaking specifically of Mexico he says that will be good news for the U.S. meat industry. Mexico is the No. 1 pork and lamb market, and No. 3 beef market to the tune of about $2.4 billion in sales last year. Another plus of the Mexican market is that it opens up a market for "a different set of products for the most part compared to Asia. So, from a carcass utilization standpoint, having unobstructed access in Asia as well as Mexico and Canada for that matter is very, very key for our business."
Halstrom acknowledged the impending shortage of pork and the current shortage on the live pig side, "but we had record high exports in July and August on pork to China. And it's our full expectation that that trend line will continue through the rest of this year and into early next year."
While Mexico, Canada, Japan and China have been garnering trade headlines, Halstrom says efforts are being made, and those efforts are paying off in what he calls developing regions such as Central America, South America, Southeast Asia and Africa. "It's by no means all inclusive, but these are some key regions where we're seeing a lot of progress. We don't often talk a lot about them, but something as simple as beef livers, where we are having more and more outlets to places like Peru, places like Mexico, places like Angola and South Africa. So, we really need to look at the entire world to maximize the value."
Speaking to maximizing value, Halstrom says on the pork side some of these "secondary" markets may be the ticket for increasing value in cuts that American consumers do not value. "I think you can go right on down the list with other parts of the world as well. Colombia has had huge export growth in the past five years, but also Peru, Chile and Central America are markets where we're doing a lot of work on the loin and not only the bone-in and boneless loin, but the credit items of the loin, like the rib-in and the ham-in," he says. "You can ask a lot of people in the industry what is one of the primals that's underperforming? And a lot of people would say the loin, and I think a lot of these secondary countries are great target places to develop some of these credit items or items that we wouldn't consider to be the primary things we talk about."
U.S. pork variety meats have always found a home in China, but that dependence has changed, when that 72% duty hangs over the market. "This is the opportunity to diversify," he says, with "Mexico, Central America, South America, even Africa, are destinations for some of these variety meats."
African swine fever, though a devastating pig disease, has created trade opportunities for U.S. pork in Southeast Asia, especially in the Philippines and Vietnam. "There are backfill opportunities here as well with not only the secondary cuts but primary cuts like picnics and butts and the hams," Halstrom says.
Halstrom was joined on the call by Joel Haggard, USMEF senior vice president, Asia Pacific; Jihae Yang, USMEF-Korea director; and Gerardo Rodriguez, USMEF marketing director for Mexico, Central America and the Dominican Republic.