Record beef exports in 2022 impact Illinois cattlemen

SPRINGFIELD, Ill. — Illinois cattle operations have a significant effect on the economy in the state.

“Your industry has a $500 million impact on the state of Illinois,” said John Herath, communications director for the U.S. Meat Export Federation.

“U.S. red meat exports contribute 15% of the value of a bushel of corn in Illinois,” said Herath during a presentation at the annual meeting of the Illinois Beef Association. “So, $1 per bushel of corn comes from U.S. red meat exports.”

Herath stressed to the Illinois cattlemen the importance of producing quality beef products.

“We hear about it every day all around the world that the beef you produce is not comparable to anything else they experience,” he said. “It’s not just ribeyes and strips. It’s down to the variety meats and that quality sets U.S. beef apart.”

Last year, 15% of U.S. beef production was exported.

“So, $477 per head of cattle slaughtered came from meat exports in 2022,” Herath said.

Before last year, there had only been one month where U.S. beef exports surpassed $1 billion, the communications director said.

“Last year, that happened in seven months,” he said. “It was a new record for U.S. beef exports at $11.7 billion in 2022 and the previous year it was just over $10 billion which was also a new record.”

Japan, Korea and China/Hong Kong are the key markets for U.S. beef exports.

“For per-head value generated by markets, Korea is at the top of the list because they’re buying the higher-end quality of product,” Herath said. “They have the income to support that and Japan is a much more price-sensitive market.”

The communications director talked about some of the highlights in 2022.

“We set an all-time record for sales to South Korea at $2.7 billion,” Herath said.

“Japan continues to be a strong market for us, but sales were down 4% last year,” he said. “Japan is just now starting to come back from COVID lockdowns, so we expect they will be picking up their purchases in 2023 and getting back to normal.”

There are some headwinds impacting the exporting of U.S. red meat, including Proposition 12, even though this is a pork issue.

“It’s a direct interest to the meat export industry because so much product moves through the California port,” Herath said. “There are concerns about the border inspection paperwork process to make sure product can still move freely through California.”

The longshore workers and the ports on the West Coast have been in contract negotiations for just over a year.

“There are work slowdowns and that is creating uncertainty about West Coast ports, so some of the shipments coming into the U.S. are rerouted to the gulf ports,” Herath said.

This impacts all of agriculture.

“If there aren’t ships coming in to drop off loads, then there aren’t ships loading to take product into Asia,” Herath said. “If this drags on and gets worse, that will have a dramatic impact in chilled beef going into Asia.”

The reduced supply of U.S. beef impacts the outlook for exports in 2023 and for the next couple of years.

“There are two key reasons why we are focused on exporting product,” Herath said. “We know this is cyclical so there is going to be supply again and when that comes back we need to make sure we have demand in the export markets.”

In addition, it is important to build value for the entire carcass, not just for ribeyes and strip steaks.

“We need to make sure rounds and variety meats have value so there’s financial incentive built for the entire carcass,” the communications director said.

Although there are challenges for U.S. red meat exports, Herath said, there are lots of opportunities.

“The post-COVID foodservice rebound is just now starting in a lot of countries and there is an expanding middle class in the ASEAN region,” he said. “The three key markets we’re focusing on in 2023 are Vietnam, Singapore and the Philippines.”

“We want to diversify demand not only geographically, but also by the cuts,” he said. “The biggest part of what we do is finding the right cut for the right market.”

During the first three months of this year, Mexico has been the star, Herath said.

“Beef exports to Mexico are up 16%,” he said. “The peso has remained strong against the dollar and Mexico has a growing middle class.”

Another strong market is the Philippines, which has increased beef purchases by 15%.

“They had an outbreak of African swine fever which decimated their pork industry and pork is key to their diet,” Herath said.

“Their government dramatically lowered import tariffs which opened the door to U.S. and EU product and it also opened the door to U.S. beef.”

Exports to Africa have increased 84%.

“It is a small piece of the pie, largely variety meats,” Herath said.

There are a lot of political and economical differences across the African continent.

“But there are 1.3 billion people and some of the youngest demographics on the planet, as well as the fastest growing middle class on the planet in some of the countries,” the communications director said said.

Africa has a tremendous amount of opportunity for beef exports, Herath said, as well as a lot of challenges.

“One challenge is building out the supply chain to get the product where it needs to be,” he said.