Crossing Borders

by Bernard Shire
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American poultry meat exports during the first half of this year set new records, increasing by 13 percent over last year’s. US poultry meat exports reached 1.66 million metric tons, with value climbing 24 percent to $2.22 billion. And for the second consecutive month, in June quantity and value of poultry exports set records. In fact, June exports were the highest ever recorded for that month, at $427 million and more than 323,000 tons, according to the USA Poultry & Egg Export Council, the poultry industry’s export trade association.

While poultry exports set records, meat industry exports are higher than ever this year. Despite a continued slump in US red meat export volume, the value of beef and pork exports for the first eight months of this year remained slightly ahead of 2011’s record-setting pace, according to statistics released by the US Dept. of Agriculture and compiled by the US Meat Export Federation.

Pork exports through July were valued at $3.56 billion, 5 percent higher in volume and 13 percent greater in value than the record pace last year. While beef export volume was down 11 percent from last year, the value of beef being exported the first seven months of 2012 was up 4 percent, to $3.16 billion.

With these increases, more meat and poultry processors and trading companies are doing exporting, and in the meat industry, importing as well. Philip Seng, USMEF president and CEO, said recently export values are a positive sign for a rebound of the American economy.

Toby Moore, a spokesman for USAPEEC, says 20 percent of the dressed weight of chickens is exported, while turkey exports are about 12 percent of production. Very little poultry is imported into the US and most of the exporting is carried out by trading companies rather than poultry processors, he says. The increase in poultry exporting is due to favorable exchange rates and growing international demand, particularly in African countries.

Last year, 27.5 percent of all US pork production was exported, valued at $55.55 a head. On the beef side, 14 percent of total beef production was sold overseas, with a value of more than $206 per head, according to Jim Herlihy, USMEF spokesman. During 2011, the US red meat industry, including beef, pork and lamb industries, set exporting records, reaching a total of $6.1 billion in export value, Herlihy says. And importing was also up. Herlihy reports through the first seven months of 2012, the US imported beef products valued at $2.46 billion and pork products worth $760 million.

Trading business

One extremely busy trader is Howard Milner, who owns and operates Mercer Meat, a wholesale meat-trading company based in Dallas. He says a lot of beef, pork, chicken and turkey is bought from processors in the US and sold overseas. “We purchase from processors in the US and overseas, and sell them to distributors here in the US, and export to Mexico, Canada, Latin American countries, including Central American destinations like Honduras, El Salvador, Guatemala, the Caribbean, and countries in the Pacific Rim and Africa,” Milner says. “We also offer our expertise to processors on [international] regulatory changes and market trends, to help protect our customers’ bottom lines.”

Milner has been a meat trader since 1988, but opened Mercer Meat, his trading company in January 2010. “I wanted to be able to move in all directions in the meat industry, I wanted to buy from processors and sell to them, as well as import and export meat and poultry, buying from processors and then exporting their products, as well as representing processors who want to export.” Even though he’s a small player in the trading world – “I do $10 to $15 million a year in business – believe me, I’m small. Some of the large traders do $350 million a year in business,” he notes – his clients include processors like Tyson Foods, Cargill, JBS and Pilgrim’s Pride.

When Milner began, about 70 percent of his business was domestic selling and trading, with only about 30 percent exporting. That has since reversed. “There’s more business to be done by exporting than in domestic sales,” he says. Traders do well, he says, because overseas companies like buying from American traders.

“We offer products from virtually every processor or packing house in the US, and they’re all approved.” Customers are found by going to conventions in countries where there may be meat and poultry markets. “You have to be there and make the contacts,” he says. American exporters offer competitive prices, cheap freight and great credit terms.

Maggie O’Quinn, executive account manager for Certified Angus Beef LLC, in Wooster, Ohio, exports for the company in Latin America and the Caribbean, and recently returned from a trip to the Dominican Republic. Her company’s exporting dates back to 1982. Currently, export sales make up 12 percent of Certified Angus sales. “Our brand sales for export have been growing, and part of the reason for that is product sales are advancing faster than commodity sales,” she says.

Considering how high the beef market is now, it’s amazing how much the company can export and sell overseas now, but there are factors to explain this situation. “Customers in Colombia, Chile and other Latin American countries are willing to pay a lot,” O’Quinn says. “Also, CAB owns the brand, not the cattle or the product, and we license companies to sell our product around the world. Packers always have tremendous demands in these countries, and there is a driving, increasing demand in the premium sector. There is also a value in these countries for cuts of meat that are undervalued in the US, especially because of the recession. Sometimes we have to decide if there’s more of a market to sell short ribs, for example, in the US or Chile.”

CAB, owned by the American Angus Association, exports to more than 70 countries. Decisions are made about which countries to market to. “The bottom line is countries accepting a wide range of products, with the least hassle involved,” O’Quinn says. She travels to the countries she deals with frequently, in order, among other things, to put buyers and sellers together. “I visited Chile recently; it was easier there than trying to put deals together stateside, and I was able to do promotions with retailers. When I go, I ask questions such as, ‘What’s the product flow?’ and ‘Where do the products go?’ I also evaluate the distributors and I pick the exporters because they’re licensed by us to sell our brands,” she says.

In O’Quinn’s region of work, there are 30 exporting companies, packers and distributors, and she’s chosen all of them.

Exporting turkey

Joel Coleman runs turkey exports for Butterball. This large turkey producer has exported turkey products around the world for more than 25 years. The full line includes commodity parts and meats as well as whole birds. Butterball also exports value-added raw and cooked products from its deli and CPG channels; foodservice and retail products; offal; and commodity products the US market can’t absorb. The company exports 15 percent of its annual volume.

Coleman says whether a company’s return on export sales is more or less profitable than domestic sales depends on the type of product mix it exports. “If a company’s portfolio only consists of commodities, the values may be lower. But every market brings an opportunity to sell specific turkey products at good returns if the consumer demand and need for protein is high,” he says.

Butterball has dealt with plant inspections and audits from foreign government officials. The company works very closely with USAPEEC, which keeps Butterball and other exporters current on issues that affect its importing, as well as advocating for the industry on trade issues.

Coleman explains how markets are found. “Trade organizations like USAPEEC, the National Chicken Council, the National Turkey Federation and USMEF can assist with market introduction and knowledge. An exporter can also use the USDA export library website as a tool,” he says.

Boston Agrex, led by Larry Lieberman, is a meat and poultry trading company headquartered in Norwell, Mass. “We are a trading company, but we are also a distributor and we hold inventories, and break bulk, so we’re really a hybrid operation in the exporting business,” he says. “We also do some custom packaging under our own brand names.

“My company’s been in business since 1981. We buy a certain amount of product from processors and other distributors and get involved in exporting it,” Lieberman adds.

He thinks most exporting is done today by traders rather than processors. “Probably 70 percent of meat and poultry products are exported by traders, with processors involved in selling 30 percent of what’s shipped overseas,” he estimates.

Why would that be? “Traders have a combination of expertise, and knowledge of the markets. We’re used to handling credit and risk exposure overseas. And the industry culture, because export trading companies, really began the exporting activities for the meat and poultry industry,” he says.

Huge market

Terry Reynolds, executive director of sales, and Jay Theiler, executive director of marketing for Agri Beef Co., based in Boise, Idaho, point out two major reasons the company has been involved in meat exporting for a long time. For a variety of reasons, he believes that exporting meat products is a business strategy that is helping Agri Beef and the American meat industry, in general, grow.

“Exporting, and importing for that matter, helps companies like ours diversify their risk,” Reynolds points out. “The second major reason is 96 percent of the world’s population lives outside the US. There’s a huge market out there we’d like to reach.”

Theiler says some of the products exported by Agri Beef include those not consumed much in the US, including offal, tongue, liver, short ribs and heart. “But in other countries, there are big markets for those products.”

Much of Agri Beef’s exports go to Asia, Russia and Canada. “This year, during the first nine months, we’ve exported products to 19 countries so far, and generally we ship to 28 different countries,” Reynolds notes. In searching out markets, Agri Beef seeks to work with highly developed countries. “The more developed the country, the higher prices they will pay for our products – and the more developed and complex their markets for importing are,” Theiler points out.

American meat and poultry processors, as well as the traders who do a lot of exporting and importing for the industry, are pleased about how business has increased this year, and they are even more optimistic about growth in 2013.

Bernard Shire is a contributing editor based in Lancaster, Pa. He also works as a food safety consultant and writer for Shire & Associates LLC.

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