2018 - National Meat Institute of Uruguay (INAC)

Suppling country outlook:

URUGUAY

National Meat Institute (INAC)

Meat Importers Council of America – MICA

October, 2018

Miami

2018 - National Meat Institute of Uruguay (INAC)

Presentation Outline

1- The US beef market for Uruguay

2- Uruguay´s production and market situation, 2018 projection

2018 - National Meat Institute of Uruguay (INAC)

1. The US beef market for Uruguay

3

2018 - National Meat Institute of Uruguay (INAC)

Uruguay is a small player in US beef imports (<5%)

1. The US beef market for Uruguay

4% to 5% of US chilled and frozen

beef imports in the last years…. 4

Source: INAC (Global Markets Monitor). Data for

0201 and 0202

Th

ou

sand

C

WT

US chilled and frozen beef imports by country

200

400

600

800

1,000

1,200

1,400

1,600

2010 2011 2012 2013 2014 2015 2016 2017

OTHERS

BRAZIL

MEXICO

NEW ZEALAND

CANADA

AUSTRALIA

URUGUAY

2017 – National Meat Institute of Uruguay - INAC

The United States:

A key market for

Uruguay´s beef industry

2018 - National Meat Institute of Uruguay (INAC)

1. The US beef market for Uruguay

2003 to 2018: the US has been the largest market

22% tons exported from UY went to the US

0%

10%

20%

30%

40%

50%

60%

70%

80%

0

50,000

100,000

150,000

200,000

250,000

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

(est.)

US

Sha

re o

fto

tal U

Y v

olu

me

expo

rts

Ton

s (

ship

ped

weig

ht)

Uruguay´s refrigerated beef exports to the US and share of total exports

Tons % UY exports

Source: INAC

2018 - National Meat Institute of Uruguay (INAC)

Current situation

1. The US beef market for Uruguay

- 20 beef plants and 6 ovine plants approved for the USA

- USD 233 mm annual exported FOB value (average, 3 years).

7

0

100

200

300

400

500

600

200

3

200

6

200

9

201

2

201

5

201

8 (e

st.)

Mill

ion

s U

SD

UY: total beef exports FOB value to US

Source: INAC

2018 - National Meat Institute of Uruguay (INAC)

- Chilled exports: 7% volume 2017.

- Growing value of imported beef.

- Certification programs:

- Organic

- Never ever, ABF, grass fed, certified natural, breed claims, others.

8

0

2,000

4,000

6,000

200

3

200

6

200

9

201

2

201

5

201

8(e

st.)

Usd

/to

n

UY: frozen beef value exported to US

1. The US beef market for Uruguay

Source: INAC

2017 – National Meat Institute of Uruguay - INAC

The TRQ is the largest

limitation for Uruguay

9

2018 - National Meat Institute of Uruguay (INAC)

The TRQ is the largest limitation for Uruguay

1. The US beef market for Uruguay

- Uruguay has 20.000 tons of the US beef TRQ, only 2,9% of the total.

- In the last 15 years, 2/3 of the volume shipped to US was OUT of quota.

- For the period 2015 to 2017:

- Uruguay exported 77% volume above the quota level.

- USD 72 mm paid in import duties, 11% of the CIF value.

- Average import tax of USD 680 / ton exported.

- Above the quota level, other markets are more price competitive.

10

2018 - National Meat Institute of Uruguay (INAC)

2. Uruguay´s beef production,

market situation and 2018

outlook

11

• Stabilized production: 600 thousand CWT

• Ratio exports / domestic: 70/30

• Exports 2018: 420 thousand CWT (slightly down -6%- from 2017 levels)

2. Uruguay´s beef production situation

12

0

100

200

300

400

500

600

700

199

8

200

0

200

2

2004

200

6

200

8

201

0

2012

201

4

201

6

201

8 (e

st.)

Tho

usand Ton

s (

CW

T)

Uruguay´s beef production

Export DomesticSource: INAC

2018 - National Meat Institute of Uruguay (INAC)

Cattle Slaughter near 2,2 mm heads (average 10 yrs)

2. Uruguay´s production perspective

13

1,600

1,800

2,000

2,200

2,400

2,600

2,800

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

(est.)

Tho

usand h

ea

ds

Uruguay cattle slaughter, 2005 -2018

Source: INAC

2018 - National Meat Institute of Uruguay (INAC)

Positive medium term

production perspective

14

Highest breeding cow

herd in the history

2018 - National Meat Institute of Uruguay (INAC)

Increasing production, but also quality

2. Uruguay´s production projection

15

+ Angus breed in the stock

+ Weight

+ Grain finished steers and heifers

Source: INAC

Steer Cow

Angus Hereford Others Dairy

2018 - National Meat Institute of Uruguay (INAC)

2017 and 2018 market

and industry highlights

- Industry acquisitions (NH and Minerva)

- UY allowed to export bone-in lamb to the US

- UE-MERCOSUR, FTA

16

2018

- Japan market access, expected first semester 2018

2017

• No significant changes are expected for 2018 in terms of the export destinations

• China will continue with a firm import dynamic and top destination for UY beef

• The US and UE as other key markets.

• US: similar levels, 35 thousand tons for chilled and frozen beef.

2. Export markets 2018

17

0

50

100

150

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200

3

200

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200

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200

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200

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200

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201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8 (e

st.)

Tho

usand Ton

s (

Ship

ped

weig

ht)

Uruguay beef exports 2003 -2018

ASIA MERCOSUR NAFTA UE OthersSource: INAC

2018 - National Meat Institute of Uruguay (INAC)18

Thank you!