I think one of the things that probably has the most impact would be the dollar. Obviously we have had a weaker dollar for the last few years.

Of course this has been helpful as far as accessing most of these markets and markets that we are not as aggressive in. It would be helpful if we even had more access in that regard.

Q: So trade partners will not be looking at too much of the U.S.’s finances, as long as they are creating the products that they need?

A: That’s right, and you know there are different firms that do these ratings and of course S&P was the only one that did this.

The other ones held up quite strongly. If you take a look at some of the other economies of people that we deal with, their credit ratings ... are actually much worse than the U.S.’s.

So it is something that is out there and people look at. But obviously I would have to say I don’t think it had any negative impact as far as impeding our ability to export products.

Q: There is a USDA report saying that for every $1 billion worth of agriculture goods exported that approximately 8,000 jobs are created. What possibilities exist for building upon that type of potential in the job market?

A: When you take a look at this year ... we are anticipating the USDA’s forecast doing close to a $135 billion worth of exports.

That’s 8,000 jobs for every billion dollars. That’s pretty exciting when you take a look at what this means, especially in rural America where you have a lot of agriculture and, of course, where you have a lot of people that have been impacted by the downturn in the economy.

So as you start to look at what the bright spots are – especially if you are in rural America – the export market is definitely the most positive dividend that you have, whether you are producing corn, soybeans, cattle or pigs.
It is a major market. Just on the livestock side this year we think we will export close to $10 billion and or exceed $10 billion for the first time ever.

Q : The trade agreements that the U.S. is working on relate a bit on South America. We think so much about Brazil providing to those countries but what exists for U.S. potential on trade?

A: A lot of the countries that we compete against, for example, Australia, there they would be selling most of their product as full sets.

In other words, they break down a carcass in 12 different boxes and then they export it. But what we do, because of the size of our industry, we can export different types of items to different customers.

They can procure from the U.S. exactly what they want and exactly the specifications they want. We are not just saying, ‘Here’s our specifications – buy it.’ We are actually tailor-making to these customers.

What we are finding in South America is that, for example, the culotte muscle, there are different items that we have been very successful with in South America that have been extremely and very positive for our export interest in South America.

With Colombia and Panama and these free trade agreements – we already have one initialed in Chile so recently that we have done a major promotions down in Chile for U.S. product.

When you have a zero duty going into these markets, then you have our product and then you have the exchange ratio as it is, it is an opportunity for us to go into places that we haven’t been before.

Q: Talk a little about where Japan now stands months after the tsunami, earthquake and nuclear tragedy.

A: I think everyone was very concerned that, from our export standpoint, if this was going to really impede our efforts to sell product into Japan. Frankly, it’s just the opposite.

If we take a look at beef export numbers to Japan, we are up about 45 percent in volume. We are up about 50 percent in value over the same corresponding period from January to July of last year. So actually they have wanted to buy our product. We are promoting our product very assiduously in that market and in different areas within the market. ...

I would say that also the U.S. industry has really stepped up as a result of this. USMEF is working with our industry partners.

We have already delivered close to 150,000 meals to the people who were affected there in the Tohoku area in northern Japan area.

We have also worked on a big recovery effort just recently. We did a promotion that we tied up with different concerns, for example rice or saki or soy sauce that is produced in those areas.

So they could tie up with U.S. product and of course we did these promotions with these local retailers. Over 152 firms were involved in this.

Q: As these efforts go on, is it helping make the case for greater access with officials in Japan? Does it help make the case there that our beef is now safe and able to go that country?

A: When we take a look at the numbers, I think the case that our beef is safe, the testament to that is that all the major retailers, the major hotels, the major food service establishments ... have all decided and have elected to utilize fully U.S. beef.

If we look back just four years ago in Japan about 70 percent of the consumers were against consuming our product, they did not trust the product, today about 70 percent of the consumers say they do trust the product.

So over the course of the last four years, with Checkoff dollars and also given with these government dollars that are very important to us as far as what we do.

We have been able to actually turn that negative into a positive very much like we have done also in Korea.

We have launched major campaigns in Japan. We have launched the ‘We Care’ campaign in Korea. ... This type of work reaching out to the consumers to the whole fabric of the society has really helped to turn that whole situation around.

The answer to your question, frankly, I think it will help because we have spread a lot of good will. The ministries over there are quite familiar with what we are doing and what the industry doing. And it’s had a lot of positive impact. It’s been reported very, very positively.

Q: Huge political change has happened in the Middle East. How has it affected the demand for U.S. beef?

A: When we take a look at the Middle East, actually this is an area that has been growing the last two or three years.

As you know there is tremendous oil wealth there and we know what we have had to pay here in this country for oil and fuel.

So you know there is money in the Middle East and there is also interest in buying our product.

We can be confused sometimes by some of the issues that are going on in Iran and also to some degree in Iraq, but Iraq also is starting and beginning to import product.

They have some pretty stringent regulations to get into the Iraqi market.

But if we take a look at some of the top markets for us, Egypt – even though they had that tremendous unrest, as they called it the Arab spring – our numbers in Egypt, frankly for the first seven months of this year are up about 38 percent; the United Arab Emirates is up above 37 percent; Saudi Arabia up as well – we are up about 10 percent in Saudi Arabia.

So as we start looking in some of these markets we are seeing, other than the markets that have been directly impacted by conflicts, there is growth and the U.S. has been recognized for the quality and consistency of the product in what we are doing. We are demonstrative there.

Q: So there are new nations that we can probably eye in that region that two, three years down the road will probably pick up in the US beef market, or it going to be a slower advancing?

A: We think the advance will continue as the world is pending any catastrophes from the standpoint of economic or any other, but we would see especially Egypt and the Emirates and Saudi Arabia continuing to grow, we do see the Iraqi market, in the near term, as being a positive area for us and for our product –

we have of course a lot of competition from Brazil and Australia, also very active in that market – now we also look at the Kuwaiti market; it is a much smaller country and much smaller market but the Kuwaiti market also is very positive for us, so when we look around the globe –

the way we look at the globe is it is a world of opportunity and as we have talked about just South America when we work in Chile, for example, and you look at Guatemala and Peru – all these areas where we have the wherewithal to work in these markets and develop, it is amazing how quickly these markets respond to the products that we are able to supply.

Q: What concerns do you have as we look to the supply of beef and our trade partners due to this drought and the climate problems that we are seeing in the production end?

A: I hate to speculate on the extent this drought affects our herd reduction. But I do know I can indicate what our overseas trading partners are saying and they are very concerned about the U.S. because the U.S. has always been regarded as the country that has this boundless and endless supply of agriculture.

With the declining cow herd and the declining production this has had a lot of psychological impact and it is a concern.

So what we are starting to see is, countries now are talking much, much more about food security. It is not so much that they are saying that ‘We have to be self-sufficient,’ but ‘How can we engender food security?’ in the countries they live in.

Overseas people are talking about this because they want to make sure they have that supply. Once people have moved from the cereals to the proteins, they don’t want to move back and, if they do, it usually causes a lot of unrest.

Some people would say that has a lot to do with the Arab Spring over food, as you listen to news and people comment on this.

So I think the world is very concerned about what is going to be the available supply. They are watching weather, they are watching production in the southern cone, in like Argentina and Brazil and Uruguay.

But as you know, Australia, there are very few countries that really provide beef in a large basis, one would be that southern cone about those three or four countries and South America, the United States and Canada.

And of course, as you take a look at India and some of those countries, so it is not plentiful.
As you go to Russia, China – they are having very difficult times trying to produce the type of beef that they are going to need to consume.

So right now in the world there is a shortage of beef and actually our production is going in the wrong direction when you look at the trend that is going on in the world.

The world wants more beef and we are actually making reductions, so hopefully at some point this will trigger an expansion in our herd and we can move forward if the weather permits.

Q: The USDA is seeking in the next few months some feedback from producers about the new traceability plan. How important is a plan like this from a perspective of our trade partners?

A: If you are in Korea, or if you are in Japan and you are a net importer of product, say, if 50 percent of their total caloric intake is imported, they are very concerned where it is produced, how it is produced and who produced it.

So it is a lot different than maybe some of the concerns that are registered here in the country about traceability.

But frankly most of the export destinations that we are exporting to are asking for some form of product trace-back.

What we are seeing is some of our major competitors are actually not so much talking about the quality of their product but talking about the fact that they have traceability that you can trust.

So this is becoming more of a factor in the international marketplace. It’s something we are going to have deal with.

Q: Canada, from a value standpoint, has just over taken Mexico in value exports. Is that just simply a currency differential between the two countries or are there other factors that make Canada our top partner from a value standpoint?

A: Well there is no doubt that the Canadian dollar is as strong as it has ever been. So the currency does play a factor in this. I think we all have to remember that about 90 percent of the Canadian population live about 9 miles from the U.S. border.

So the ability to import our product ... it is much easier for them to import out of our Midwest and plants more in the Eastern corn belt.

So what you see in Canada, this is being extenuated as cost of transportation, not only currency but cost of transportation.

All these types of things are going up. If you are importing products you are (asking) ‘Where can I get it the cheapest?’ and ‘Where can I keep costs down the most?’

There is a tremendous familiarity with our U.S. product and what we do. So in some incidences there is as much effort for us to extol the virtues of American beef.

It is pretty well known that the Canadians are great, so that again is a very strong success story. 

PHOTOS:
Top Right: Members of the Nebraska contingent that participated in USMEF’s Japan Relief and Recovery Effort recently include (from left) Bill Schuster of Nebraska Corn, U.S. Olympic bobsledder Curt Tomasevicz and Bill Rhea of Nebraska Beef.

Bottom Right: U.S. Meat Export Federation officials worked with industry partners to deliver meals to Japanese in the weeks after the Tohoku earthquake. Photos courtesy of U.S. Meat Export Federation.