1

Philip SengPresident and CEOU.S. Meat Export Federation

IMS Regional ConferenceIMS Regional ConferenceRome, ItalyRome, ItalyOctober 2005 October 2005

““The European Union in the The European Union in the Global Meat Complex”Global Meat Complex”

Global Trends

The next 25 to 50 years

• Population

• Resource management

• Technology

• Knowledge

• Economic integration

• Conflict

• Governance

What is the Market Potential?

World Population in billions

0

1

2

3

4

5

6

7

8

9

1990 2000 2010 2020 2030

World Per Capita Income Growth Index

0

50

100

150

200

250

1970 1980 1990 2000 2010

19

70

=1

00

FAO Meat Consumption Estimates

Source: FAO

0

50

100

150

200

250

300

350

mil

lio

n m

etr

ic t

on

s

1997/1999 2015 2030

Poultry

Pork

Ovine

Bovine

+34%

+108%

+30%

+57%

+22% +44%

+22%+64%

% change from base year

+29%

+67%

The EU’s Role

Global Red Meat Consumption

0

20

40

60

80

100

120

140

160

180

'60 '65 '70 '75 '80 '85 '90 '95 '00

mil

lio

n m

etri

c to

ns

Rest of World

EU-15

Source: FAO

2005 Key Importers

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Japan U.S

.

Russia

n Fed

Mex

ico

EU-25

Hong Kong

China

S. Kore

a

mil

lio

n m

etri

c to

ns

PoultrySwineBeef

Source: USDA

2005 Key Exporters

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Brazil

U.S.

EU-25

Canad

a

Austra

lia

Argen

tina

China

India

mil

lio

n m

etri

c to

ns

PoultrySwineBeef

Source: USDA

2005 EU Meat Balance of Trade

(0.5)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05

mil

lio

n m

etri

c to

ns

PoultrySwineBeef

Source: USDA

Current EU Red Meat Situation

Top 10 Global Beef Consumers2005

0 2 4 6 8 10 12 14

Canada

Japan

India

Russia

Argentina

Mexico

Brazil

China

EU-25

U.S.

million metric tons(cwe)Source: USDA, FAO

EU-25

Total Cattle: 88.4 million

PCC – Beef: 19 kg

Self-sufficiency: 98.3% (’05 est)

Top 10 Global Beef Importers 2005

0 500 1,000 1,500

Egypt

Taiwan

Philippines

Canada

Mexico

S. Korea

EU-25

Russia

Japan

United States

thousand metric tons(cwe)Source: USDA

Value of EU beef external imports in

2004: US$1.7 billion

Top 10 Global Pork Consumers2005

0 10 20 30 40 50 60

Canada

Philippines

S. Korea

Mexico

Brazil

Russia

Japan

U.S.

EU-25

China

million metric tons(cwe)Source: USDA, FAO

EU-25

Total Hogs: 152.3 million (2004)

PCC – Pork: 44 kg

Self-sufficiency: 106% (’05 est)

Top 8 Global Pork Exporters 2005

0 200 400 600 800 1,000 1,200 1,400

S.Korea

Mexico

Australia

China

Brazil

Canada

U.S.

EU-25

thousand metric tons(cwe)Source: USDA

Value of external EU pork exports in 2004:

US$3.1 billion

EU Beef Developments• Gradual decline in beef numbers

prompted by CAP (Common Agricultural Policy) reform– decouples subsidies from production – Implementation due by 2007

• UK – Over 30 Months restriction to be lifted (170-190k mt in 2006)

• Availability of commercially-priced beef from outside the EU, particularly South America

• BSE decreased production and consumption in the ’80’s and ’90’s

• Accession of new member states will not materially alter the dynamics

EU Pork Developments

• EU pork production growth rate has slowed– EU-15 pork up to 18 mmt from 10

mmt in 1970– Flat growth since 1999– Common Ag Policy affect?

• Spain pork production– Avg increase of 6% annually since

‘70– 18% average annual export growth

’02-’04

(400)

(200)

0

200

400

600

800

1,000

1,200

tho

usa

nd

met

ric

ton

s

1990 1992 1994 1996 1998 2000 2002 2004

EU-25 Beef TRADE Surplus / Deficit(exports less imports)

Source: USDA

Brazil

Argentina

Uruguay

Australia

U.S.

Others

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

1997  1998  1999  2000  2001  2002  2003  2004 

EU-25 Buying Beef From:

Source: Global Trade Atlas

196,900 mt increase for S. America

Japan

RussiaS. KoreaU.S.

RomaniaCroatia

Australia

Others

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1997 1998 1999 2000 2001 2002 2003 2004

met

ric

ton

sEU-25 Selling Pork To:

Source: Global Trade Atlas

Trade Implications

Emerging Market Access Issues

As tariffs fall, countries find other ways to protect their domestic industries– Questionable sanitary

standards• Hormone ban,

disease restrictions, zero tolerance

– Technical barriers• Burdensome

paperwork, slow approvals

– Anti-dumping measures• Traditionally used by

developed countries• Developing countries

starting to use

0%

5%

10%

15%

20%

25%

30%

1987

1989

1991

1993

1995

1997

1999

Av

era

ge

Ta

riff

ra

te

050100150200250300350400450500

Nu

mb

er

of

AD

Me

as

ure

s in

P

lac

e

Avg. Tariffs

Measures in Force

As Tariffs Fall…Other Measures Rise

Source: Cato Institute

2

11

24 23

1310

29

42

29

21

0

5

10

15

2025

30

35

40

45

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Number of New SPS Issues Raised Each Year

Source: WTO

Specific Trade Concerns by Product

Fish products4%

Wood products2%

Beverages & Tobacco

3%

Animal feed4%

Other processed food3%

Other SPS issues12%

Field crops &products

9%

Fruites, vegetables &

flowers25%

Livestock & products

38%

Source: WTO, 2000-2001 measures

Threats to Global Meat Trade

Animal Health / Food Safety Issues

– FMD: 13+ countries affected – multiple species

– BSE: 24 countries affected comprising 33% of global exports

– Avian Influenza: 17 countries affected comprising 53% of global poultry exports

– Animal diseases currently threaten 1/3 of global meat exports with losses valued at $10 billion

Impacts• Canada

– Exported 47% of production prior to BSE; dropped to 32%

• U.S.– 2003 value of exports was $4.2 billion;

decreased by over 80%

• Japan– Estimated that the food industry in Japan

will lose $5 billion due to bans on U.S. and Canadian beef

Source: Cattle-fax; UFJ Institute

Trade Concerns Reported Solved After 10 Years

Partially Solved

7%

Not Solved

66%

Solved27%

Source: WTO

Summary

• Scientific Basis Is Vital• Science Can Quickly Become Political• Consumer Perceptions Are Key /

Understanding Culture• It is the Industry’s role to provide the

necessary information and knowledge to consumers to convey the validity of globally accepted standards

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