International markets pay off for Idaho beef producers

International Markets

U.S. beef promotions in Japan funded by the Pacific Northwest Initiative (PNI) generated more than 56.5 metric tons – or 124,782 pounds – in incremental beef sales so far during the first six months of the current fiscal year. The Idaho Beef Council’s investment in the PNI this year funded multiple retail promotions with major regional chains as well as several business development teams that have traveled to the Pacific Northwest — the latest team visiting during May 2018.

As the PNI heads into its fifth year, this initiative continues to yield dividends in multiple forms to beef producers in Idaho and its partners in Washington and Oregon.

“One exciting part is that international markets consume cuts we don’t really like in the United States,” comments Greg Hanes, assistant vice president of international marketing and programs at the U.S. Meat Export Federation (USMEF), which oversees the PNI. Markets like Japan prefer cuts like short plates, short ribs, inside skirts and tongues, which in the U.S. may simply end up being ground and sold at a lower price.

“Instead, international buyers pay a premium for them,” Hanes said. During 2017, the value of exports per fed head of beef slaughtered amounted to $286.38, with the bulk of that value, $74.46, accounted for by Japan.

Another benefit of the PNI is the multiplier effect of states working together to create a bigger return on their investment. IBC contributed $25,000 to the PNI for the July 2017-June 2018 year, funds which were leveraged with matching contributions from the Washington State Beef Commission and the Oregon Beef Council. With the contribution of staff time and expertise from USMEF and matching funds from participating Japanese retailers, the initial $25,000 investment has become $300,000 or more.

The leveraging of funds enables USMEF to carry out more effective programs and broaden its reach to include new cuts and new retailers. Many of the regional retail chains targeted by the program are large companies with more than 150 outlets. Together, the targeted retail chains provide access to millions of consumers.

Beyond the immediate results of activities, however, the PNI represents an investment in future sales. Beef production is increasing in the U.S. but per capita consumption is not, Hanes noted.

“With 96 percent of the world’s population outside the U.S., that’s really where the customers are,” he says.

Besides population, income growth is a key factor. Asia contains the world’s fastest growing global middle class. In 2009, Asia accounted for slightly less than 30 percent of the world’s middle class; however, by 2020, it will account for about 55 percent. By 2030, it will account for close to 70 percent. Given that beef is a higher priced protein than other choices, this means that a larger percentage of the consumers who can afford beef regularly will be in the Asia Pacific, Hanes pointed out. By developing an appreciation for U.S. high-quality beef among this group, international marketing helps lay the groundwork for future consumption.

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