For U.S. Beef Exports, 2010 Was Fat and Happy

While analysts speculate about just how fragile the U.S. economy is, reports from one sector of American agriculture are bringing some welcome financial news.

Federal and industry officials say 2010 was the best year on record for U.S. beef exports. "Our beef exports actually eclipsed the record of 2003, which was our highest year," says Philip Seng, President and CEO of the U.S Meat Export Federation (USMEF). He says more than $4 billion worth of beef was exported last year -- a 19% increase in volume and a 32% rise in value.

"If you look at this on a value basis as well, we were up $1 billion over the prior year of 2009," he says, "so it was an extremely positive year."

Market Recovering From Mad Cow

In December 2003 a cow with bovine spongiform encephalopathy (BSE), or "mad cow disease," was discovered in Washington State. That incident virtually closed down U.S. beef and pork exports to Japan, South Korea and elsewhere in the world. "What we've been working on since 2003 is to try and get [U.S. products] restored in those markets," says Seng, "as far as our export volumes and values."

And with the exceptions of China -- which still restricts U.S. meat imports -- and Mexico -- which is finding American meat products increasingly expensive -- demand is way up. "The growth was really driven by North Asia," says Seng. "The Republic of Korea [South Korea] was up 100%. Take a look at Japan -- we were up 36%. The Middle East was also up very strongly."

Those improvements come despite special requirements for U.S. beef exports to Japan and South Korea. Both nations allow meat only from relatively young animals into the country -- reportedly to reduce any future risk of BSE. "But in spite of those apparent restrictions, we're still seeing the velocity of our exports to Korea have gone up dramatically," says Seng -- who notes that U.S. beef and pork are filling a void in the local meat market created by an outbreak of foot-and-mouth disease in South Korea.

There are some political obstacles, as well. According to the Washington Post, Senate Finance Committee Chairman Max Baucus (D-Mont.) is threatening to hold up the recently concluded U.S.-Korea Free Trade Agreement unless Seoul reconsiders some of its restrictions on U.S. beef.

Weather Is a Global Concern

The USMEF estimates a global 10% increase in U.S. beef exports this year -- but Seng says the wild cards in that equation are weather and global grain prices. Feed costs from grain make up more than half the cost of beef and pork -- and weather-reduced crops could be a prime reason for inflation when it comes to meat.

"And when I say weather, it's not just weather in Kansas; it's weather in China," he says. " We're looking at five provinces in China being as dry as they've ever been in 100 years. You saw the impact on wheat when Russia decided they wouldn't export wheat last year. Just look at the flooding in Australia. So when you look at weather, this has a tremendous impact as far as prices, and not just in the U.S."

But Seng, who recently returned from Asia with a USMEF delegation, believes the U.S. has an advantage with its beef exports after decades of experience knowing and understanding its overseas consumers.

"The ability of the U.S. to be successful in Asia has to be determined by our ability to adapt," he says. "I've often said these are not markets -- these are cultures that we are marketing to. And the more we understand the cultures we are marketing to, then the more successful we are going to be."