Whether it is a soybean crop report from Brazil, drought conditions in Australia or credit issues in Greece, agriculture commodity prices around the world move up or down on the news.
Is the U.S. beef industry immune? Absolutely not. Yes, the percentage exported is smaller than for other ag products, but the impact is still large.
In 2014, we are on pace to export 14% of total production, which both Cattle-Fax and the U.S. Meat Export Federation (USMEF) estimate adds $250 to $300 per head on fed cattle value, or about $20/cwt. On a 1,300-lb. Steer.
Maybe you knew that, but here are some related facts that you likely did not know:
The export market mainly adds value to by-products like tongue, hide and liver. That’s because domestic demand for those items is poor. Yet, when it comes to specific demand for beef in the international market, the importance of high-quality U.S.-produced beef is unquestioned.
Canada is a leading market for high-quality beef, and its producers are also responding to that demand at home and across the Pacific Rim’s lucrative global market. Yes, “Kobe” beef is the preferred choice, but well-marbled U.S. beef ranks very high with the Asian consumer.
So, for a worldwide presence like the Certified Angus Beef ® brand, international trade is a critical piece. In 2014, this portion of commerce will account for almost 15% of the nearly 900 million pounds of total sales into perhaps 60 countries worldwide. In five of the first seven months, we had the highest volume of international sales in the history of the company, all exceeding 10 million lb./month.
What might surprise many who know it as an exporter of much of the world’s leanest beef, is South America is an emerging global market for high-quality beef. Our company goal is to reach sales of 1 billion pounds by 2020, and the international market is a key to accomplishing that.
Why does the global market add so much value? Just look at the amazing price U.S. beef sells for overseas. Paul Clayton, Senior VP at USMEF, says 100 grams of short ribs in Japan sells for $3.98, which on a “pounds” basis is $17.35/lb. In the U.S., Choice short ribs are priced at $3.07/lb.
It’s more than a key to value after harvest, because sales of bull semen and live cattle contribute greatly to overall value. Semen sales worldwide have grown rapidly in the past five years. More recently live cattle and embryo sales have boomed to meet the needs of expanding herds in the eastern hemisphere. Such demand from Russian companies in particular has increased the value of Angus genetics for seedstock operators in the northern U.S.