GLOBAL BEEF MARKETING

Professional marketing makes good things happen around the world. Each sale of a product creates a domino effect of profit to a long chain of beneficiaries. The chain of world beef sales affects ranches, packing plants, livestock auctions, feed lots and producers of every grade and quality of beef.

The 2006 Secretary of Agriculture, Mike Johanns said, "The bottom line is, in order for the US to be successful in the world market, the ID (National Animal Identification System) has to be successful as well. Foreign trade can add $10-$14 per head to our cattle. Without exports, we lose that." With the Johanns numbers, NAIS was hawked to increase US cattle values up to $1,358,000,000 added dollars.

During the American Association of Bovine Practitioners meeting September 22, 2007, USDA's Bruce Knight stated that, "We want NAIS in the United States so the US will be in compliance with OIE (World *Organisation of Animal Health) export regulations by 2010."

Ken Stielow, Chairman of the Cattleman's Beef Board---Beef Checkoff, says, "That's why exports are key to the future of the US beef industry. Though they're not readily visible in this country, programs our beef producers are funding worldwide through their $1-per-head Beef Checkoff program are definitely having an impact on beef buyers and consumers in other countries." In the last half dozen years over $100,000,000 of the $80,000,000 annual Beef Checkoff was spent on international beef marketing.

NCBA Urges Doubling Checkof

On February 9, 2008 at Reno, Nevada the NCBA agreed to request that Congress increase the $1 per head Beef Checkoff to be "adequately funded" with an increase to $2 per head. Observers indicate the "sense of" the board's intentions would bring the annual collections, by law, if approved, to over $160,000,000. This would double the funding for beef promotion under the authority of the USDA which also handles the other competitive meat and grain checkoffs.
To build increased beef income for US exporters, US Hall of Famer Nolan Ryan recently was part of the celebration of US Meat Month in Japan. This March new NCBA President Andy Groseta accompanied Condoleezza Rice to South Korea to promote US beef and encourage open trade relations. It appears likely that beef export sales are returning again with the new South Korean president Lee Myung-bak.

It was published by USDA (Jan.11, 2006) that Japan was refusing to resume beef purchases from the US until the NAIS system was 100% operational. Japan did later resume trade with US beef processing plants on July 27, 2006. It appears South Korea will also resume beef trade without any NAIS mandatory requirement. The two largest purchasing countries of US beef are Mexico and Canada and they do not require NAIS. It now appears certain that NAIS is not, and perhaps has never been a factor in the US beef export equation.

Billions have been spent on US exportation of beef. Seldom, if ever, has anyone even considered the cost of return for this "investment." From USDA, Cattle-Fax, NCBA, CBB, to Secretary Rice and Nolan, it is agreed, without question, that it is full stampede do-or-die to export as much beef as possible.

Evaluation Inadequat

The world famous professor and animal scientist Jan Bonsma of Pretoria, South Africa said, "The USA has the greatest data collection in history, of any country, but some of the absolute worst statistical evaluation abilities." World beef export, live cattle, import, pounds, metric tons, dollars and to the penny values are public knowledge. The NASS - National Agricultural Statistics Service at www.nass.usda.gov site is a tell-all. For imports and exports the FAS - Foreign Ag Service at www.fas.usda.gov/ustrade/USTExHS6.asp?QI=. Any cattle producer can check the data, as can any journalist or USDA official.

These NASS statistics are for all live and processed beef and show that in the year 2007, the Value in Dollars of US export sales were $2,183,977,168. This volume of exports was shown to have increased by a few million dollars each year for the past 4 years. The Value in Dollars for US imports during 2007 were $4,857,454,008 for all beef. The volume of imports increased by a few million dollars each year during the past 5 years.

The average US resident consumes 68 lbs of beef annually, less than 3 oz. per day. This amount has also increased slightly each year. This is the amount of beef the US consumer wants, enjoys and expects.

The export/import is explained in a number of ways. Some say the US exports low quality beef product like tripe, liver, etc., and imports high quality product. Others say the Japanese market buys the highest quality steaks for the world's highest prices. One can bury himself in the NASS data and figure that out.

Buying High, Selling Lo

The Egyptian market for US beef liver has been highly touted. The total value of liver exported to all countries in 2007 was $88,445,888. The US imported $464,475 worth of liver. Beef liver, which is also pure beef, is a major ingredient in pet food. The domestic US pet food market is so huge it makes Egyptian beef liver purchases look like a wheelbarrow load in comparison.

To understand why US beef marketers swear by the crucial importance of exporting beef, one must assume there is a major accumulation of profit between the process of importing and exporting. This profit, obviously, would be large enough that NAIS is imperative and the near $190,000,000 invested to enroll premises was justified by Congress, the President and the USDA. Unfortunately over 2,000,000 livestock and equine producers in the USA are still trying to understand why anyone ever dreamed up NAIS. It doesn't and hasn't ever penciled . . . period!

The NASS data shows that the average per pound price in US dollars paid for imported beef, live and processed, is $2.39. The average price received for each exported pound of beef, live and processed, is $1.60. Each exchange of a pound of beef produces a net 79 cent loss.

To place another factor on the beef plate, Congress wants to use 40 percent of US corn production for ethanol. This amount will be removed from livestock feeding uses. This will cause a 10 to 20 percent decrease in beef production and an even more drastic reduction in pork and poultry.

As beef production decreases in the USA the need will increase for more imported beef. During 2008, for every $1 increase in beef exports, the US consumer will require $3 worth of beef to be imported from some other country with lower quality beef, less herd health and lower inspection standards than the USA. This factor will increase in 2009 and even more in 2010.

Exporting Beef--and Cas

Beef cow herds are reducing promptly as a result of the economics of the Congressional ethanol plan. Available affordable grain for livestock is rapidly diminishing. US beef production can be expected to decline and expensive efforts to export US beef products will abruptly end.

Large meat processing companies may find a profitable niche market in some distant country, and as capitalists, all should wish them well. However, when the beef lovers of the USA are forced to enjoy a much smaller portion each year, it may be very unprofitable to globally export prime steaks right past the US consumer.
In 2012 to 2015 there will be very little meat of any kind produced in the USA using grains that could be used for ethanol or human consumption. There will be very little US exporting of beef. Any association, government or business pouring money into export beef market development will obviously not be able to understand NASS data. Anyone placing NAIS tags in cattle ears to comply with the OIE's world export recommendations, or expecting any premium for NAIS identified cattle will probably not be able to produce profitably.

The quality of US beef is so appreciated for taste, nutrition and safety, it is being oversold world wide. More product is exported out and consumed in the USA than produced on US farms and ranches. As US efforts to export beef keep increasing, there will be a greater need for imported beef to supply the US consumer. If US exports increase a billion pounds, a billion more pounds will be imported to fill the need. One savings would be to drop the Beef Checkoff cost to producers by half, due to the fact massive marketing is being conducted for a nonexistent and declining product. This would allow the Beef Checkoff to compete with the other domestic US foods also promoted by USDA Checkoff funding. That would leave $40,000,000 in livestock producer's pockets.

To tighten the equation, corn is a vital world commodity. Congress wants 40% of US corn to be used for ethanol production. For the past 20 years corn exports have been increasing due, in part, to the multimillion dollar Corn Checkoff administered by the USDA. Exports of corn are projected at more than 20 percent of US crop volume and increasing each year. That leaves less than 40 percent for US human and livestock consumption. (Corn is also a major part of the pet food industry.)

In recent years, the world's developing countries have increased population numbers at about 7 percent a year, an unusually rapid rate by historical standards. The resulting need for grain consumption is an annual, calculable increase. Up to three percent of the good US agricultural farm land is being subdivided, paved or in some way taken out of production annually. The largest agricultural land buyer competing with family farms, even more than ranch mogul Ted Turner, is the US Federal Government. Conservation easements and permanent purchases by the US are removing millions of acres from productive use every year. This travesty, many feel, is the largest production loss of all to private enterprise.

Many changes will come about in the next few years. The cost of grains and beef will increase, but the bloating costs of export marketing of both should intelligently be reduced from a multimillion dollar guzzle to a small drip.

*Organisation---French spelling.

Darol Dickinson, is manager of one of the 50 largest seed stock purebred cattle operations in the USA. He is involved in livestock marketing, retail meat sales, cattle feeding, and exporting. The Dickinson Cattle Co. Inc., ranch site is www.texaslonghorn.com and his information site in opposition to NAIS is www.naissucks.com. ph 740 758 5050

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