The Growing Role of Exports in Livestock Markets (June 3, 2021 Webinar)
Department of Agricultural Economics
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06/04/2021
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29
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With Erin Borror, Economist, U.S. Meat Export Federation, and Elliott Dennis, Assistant Professor of Livestock Marketing, University of Nebraska-Lincoln.
Exports account for a significant share of U.S. pork and beef production, especially for certain cuts, adding value to every animal produced. The U.S. Meat Export Federation is working to build a strong demand for U.S. high quality, high value beef and pork, highlighting sustainability and health as well as quality, to proactively address consumer questions in the (mis)Information age. The webinar will cover the current global demand for red meat, how U.S. beef and pork exports have been performing and how exports are related to livestock markets and meat prices.
Erin Borror joined USMEF in July 2006 after receiving her M.S. in Agricultural Economist at Texas A&M University. She received her B.S. in Agribusiness at California Polytechnic State University. She serves as char of the Economics Committee for the International Meat Secretariat. Raised on a cow/calf operation in Colorado, she and her husband Bryce raise purebred and commercial cattle at Tehama Ranch in Northern California.
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- [00:00:00.329]Elliott Dennis: you're based in the University of nebraska Lincoln today we have a webinar today, this part of our weekly series of webinars produced by our extension farm and ranch management team.
- [00:00:10.050]Elliott Dennis: To find a complete listing of of past ones and future recordings, please visit our website at farm uncle that EDU that's FA R m dot you know.edu they were really.
- [00:00:26.550]Elliott Dennis: pleased to have Aaron board with us to talk about exports experts or account for a significant share of US pork and beef production.
- [00:00:36.300]Elliott Dennis: adding value to every animal that's ultimately produced and the US meet expert federation is working to build a strong demand for us, high quality, high value beef and pork products.
- [00:00:47.730]Elliott Dennis: Highlighting sustainability and health, as well as quality to proactively address consumers questions in this quote miss or misinformation age.
- [00:00:58.110]Elliott Dennis: Today we're going to briefly cover the global demand for read eat how the US beef and pork experts have been performing and.
- [00:01:05.400]Elliott Dennis: Specifically, spend some time on how experts are related to live stock markets and meet prices, with a little focus on competition.
- [00:01:14.100]Elliott Dennis: As I mentioned errand boy reconnaissance with us meet expert Federation will be presenting the webinar she's been with us mts since 2006 cheer enter Ms and aggie con from Texas a&m.
- [00:01:27.540]Elliott Dennis: And she holds a bachelor's and agribusiness from cal poly university and addition into our work that US me, yes, she serves as the Chair of the Economic Committee for the international need secretariat Aaron welcome to the webinar today.
- [00:01:47.490]Erin Borror: All right, thank you, thanks for having me it's a pleasure and thanks to all of you, joining now and potentially watching later and, as I was saying, ahead of this there's so much going.
- [00:01:59.940]Erin Borror: On you know, in the world today that was kind of hard for me to really focusing on what to discuss, but first off, hopefully, you are.
- [00:02:10.980]Erin Borror: familiar with the US meat export export Federation and the way i've always looked at it, for me, as a producer, we are your boots on the ground around the world marketing us beef and pork.
- [00:02:25.890]Erin Borror: and understanding, you know from within these markets what's really driving consumers and even, in some cases what's driving on the policy front as well, so you have folks out there working for you every day.
- [00:02:41.700]Erin Borror: I love our international staff, they are fantastic they're part of what makes this job so wonderful and just to be able to work for our industry on an international friend it's been a huge blessing to me so know that you are very well represented out here.
- [00:02:58.350]Erin Borror: And I tried to pick on some of the kind of key things that are happening this year and, at the moment, even and.
- [00:03:06.630]Erin Borror: we're going to walk through all of this, so I don't need to go into great detail and reading every bullet point here but.
- [00:03:14.400]Erin Borror: The bottom line is that demand for us beef and pork is incredibly strong, so this is a red hot domestic market, as we have some vaccine freedom here in this country.
- [00:03:26.160]Erin Borror: And that return to food service return to events everything else.
- [00:03:30.870]Erin Borror: But exports have also been red hot and we'll talk through some of that and that's even with a very mixed Kobe situation or coated come back around the world, so, in a sense, you can see.
- [00:03:42.690]Erin Borror: Even more optimism as restaurants are really able to fully reopen and consumers, able to get out there in other countries around the world.
- [00:03:52.350]Erin Borror: There are some changes on the China front super bullish for us beef some pullback for pork we'll talk a bit about that and some other crazy things happening like with Argentina restricting exports and.
- [00:04:07.260]Erin Borror: You also have this shipping backlog, which continues to impact so it's hard to imagine how big our exports would be.
- [00:04:15.990]Erin Borror: If we didn't have these logistical hurdles which really are kind of hamstringing us and that's part of what's driving your inflation of you know everything shortages of we were talking last night shortage of things like chlorine so shortages in high prices for everything.
- [00:04:32.670]Erin Borror: All having different drivers, but for us beef and pork, we put this together, a few weeks ago and it was an effort to try to capture well how complex the situation is in a way.
- [00:04:45.930]Erin Borror: But the fact that our beef prices are sharply higher than a year ago, or at essentially record levels if you exclude what happened last year with our plant disruptions.
- [00:04:57.690]Erin Borror: And at the same time we've been producing more beef and more fed beef than we did not only last year, but also compared to 2019 so it's not a supply issue it's red hot demand driving this market.
- [00:05:10.470]Erin Borror: And that's both domestically and on the export front, we saw those march exports record large and again we have USB exports up about 10% this year.
- [00:05:21.330]Erin Borror: and cold storage inventories tightened a bit more in this latest report, but still you're seeing product available there and freezers just maybe not in the format that's wanted or needed at the moment.
- [00:05:34.140]Erin Borror: And again that's a it's a demand story, not a supply issue, and then, of course, we know that the higher input costs and near and dear to you in nebraska are these higher feed in commodity prices playing in here as well.
- [00:05:49.920]Erin Borror: On the poor side it's very similar, although you have very tight inventories in this case so.
- [00:05:56.430]Erin Borror: When the production slowed last year we continued to export to consume and the that freezer inventories never been rebuilt, and so this continues to put a real floor on these port prices.
- [00:06:09.300]Erin Borror: Especially as food service is trying to read pipeline and as pork is such a critical ingredient for like everything if we think about going back to baseball games, so that hot dogs and sausages demand.
- [00:06:21.240]Erin Borror: bacon on everything you know all of this has continued to to pull on the demand side and we've not been able to refill freezers, and that has again kept these prices at much higher levels also.
- [00:06:33.300]Erin Borror: At well the highest we've seen since 2014 when we had P ED B virus or PD virus, so we are producing more pork.
- [00:06:43.650]Erin Borror: And essentially productions been at record levels and we're still seeing record high prices again this is demand and exports have slowed from the torrid pace of last year we'll talk more about this, but still very historically large and strong export volumes as well.
- [00:07:00.210]Erin Borror: And on the coven friends, I.
- [00:07:03.000]Erin Borror: can't wait for the day that I don't have to talk about this, but I wanted to include it just to give you some perspective on.
- [00:07:09.570]Erin Borror: This situation which various pretty dramatically around the world, and again here in the States.
- [00:07:15.870]Erin Borror: I think in nebraska you're pretty much you know, open and back to normal, this is my understanding.
- [00:07:21.300]Erin Borror: Here in northern California, we are rural as well, believe it or not, and so I feel like we've been so lucky that we've never really been impacted you know I hate to even say that but, as you know, as ranchers of producers, we just kept on going right.
- [00:07:34.350]Erin Borror: But in parts of the world, they it's an pretty bad situation so nobody really seems to talk about Argentina.
- [00:07:42.450]Erin Borror: I watched them more closely because it's a great country and i'm really sad all their challenges, but also because they're important on the front clearly as a major export.
- [00:07:52.350]Erin Borror: And they have been in pretty significant lockdown according to my friend and contact down there, and yet you still see these high case numbers they're going into winter and maybe that's part of it.
- [00:08:03.120]Erin Borror: In Colombia, they are not in lockdown they've sort of disregarded, you know, whatever they're told to do and kept on moving.
- [00:08:10.560]Erin Borror: But they also have these strikes ongoing and some pretty significant current political unrest, if you can call it that.
- [00:08:17.820]Erin Borror: And so you know more cases in Colombia also big disruption in product movement throughout that country, which is pretty important it's a big pork market for us.
- [00:08:27.510]Erin Borror: And in Chile also more cases, although they have a high vaccination rate and so there's hope that these cases are mild.
- [00:08:35.490]Erin Borror: But it's pretty important to watch what happens in Chile, as an indicator again because they have a high vaccine rate which i'll show you on the next slide.
- [00:08:42.270]Erin Borror: And in Brazil they've also had a pretty rough go of it, which has been better covered in the press, I would say.
- [00:08:48.360]Erin Borror: But the other thing key thing to note here is Asia, so, as you know, many of our top markets are in Asia, I have them, I think all included in here and they basically hardly show up on the map so.
- [00:08:59.790]Erin Borror: Japan has been dealing with what they're calling their fourth wave and they're under fairly strict.
- [00:09:07.590]Erin Borror: Guidance mostly on things like they can't serve alcohol at restaurants and they have early closing hours, so that does really continue to hit on the food service in Japan.
- [00:09:16.290]Erin Borror: in Korea they've been again in some level of social distancing for quite a while now, but as a GA in our our soul office will say is food service is pretty much back to normal.
- [00:09:27.300]Erin Borror: i'll be that's only like 80 90% of you know what normal used to be and Taiwan here doesn't hardly even show up either, but they are in like complete lockdown now they went along here with no cases and then within the past couple of weeks they've seen this surge and.
- [00:09:44.970]Erin Borror: kind of a terrible situation they're in one of our top beef markets, so this thing seems to be constantly changing and unfortunately it's still with us again, even in places that had been like unscathed up to date, so are.
- [00:09:59.010]Erin Borror: Our boots on the ground are still you know adjusting on the fly as we go with this and then on the people who have had vaccine I should have noted both these charts on our on.
- [00:10:09.240]Erin Borror: A per per hundred people or per million, so that you have that scale in there, too, just for population.
- [00:10:16.890]Erin Borror: And in the United States we're kind of an exception again due to our hive vaccination pace, although Canada has really come on strong.
- [00:10:26.130]Erin Borror: you hear about the UK being quite heavily vaccinated and again here's Chile so to me, these are important to watch what happens in these countries that do you have the higher vaccination rates.
- [00:10:36.810]Erin Borror: And then Importantly, these Asian countries are trying to get going on the vaccinations so South Korean President moon was visiting Biden that last week or the week before.
- [00:10:46.740]Erin Borror: And they were talking about you know how to get Korea more vaccines and same with Japan they've been really running behind them getting folks vaccinated and trying to get that moving.
- [00:10:57.930]Erin Borror: To try to get somewhat back to normal, but it's going to take time to get the world vaccinated and again we're going to be living with this virus, you know, potentially, for a long time, but at least on the vaccine front.
- [00:11:10.260]Erin Borror: One metric said, given our current production capacity it's 24 months to get the world vaccinated we know logistical hurdles potentially make that longer.
- [00:11:20.910]Erin Borror: On the meat supply situation so African swine fever continues to have a huge impact on this is not only in China it's also impacting production in Southeast Asia, especially, most recently in the Philippines.
- [00:11:34.710]Erin Borror: Also, still having an impact in Vietnam and other Southeast Asian countries as well.
- [00:11:40.080]Erin Borror: it's also still a huge issue in Eastern Europe and in Germany, although most of that is in wild boar and not really impacting production, but it is impacting trade flows for sure.
- [00:11:52.200]Erin Borror: And we'll talk a bit more about that, but the other thing to note here is not only is china's production off significantly from what it was pre ESF, even if you have a really optimistic rebound built in for this year.
- [00:12:05.640]Erin Borror: outside of China production was fairly flat last year and then you're talking about maybe a rebound this year and I think I caution to the lower side, here we have seemingly very tight beef supplies and even on the work site it's hard to find much growth.
- [00:12:23.040]Erin Borror: As we look around the world, so again demand is during the day, but you also underpin not with pretty limited global supplies as well.
- [00:12:33.210]Erin Borror: And then, if we look at trade specifically so we we are exporting more, this is not the top experts i'm showing here in in billion US dollars for for beef and pork.
- [00:12:45.630]Erin Borror: and beef exports are up marginally for these top experts, you have some a lot of things happening here, but you have.
- [00:12:53.940]Erin Borror: You 27 so brexit is really impacting the trade volumes for both beef and pork, and that means less beef and pork traded between the UK and the EU, and so that's in here it hasn't maybe impacted that much around the world, but it is impacting the total numbers to some degree.
- [00:13:10.680]Erin Borror: You have a lot less coming out of Australia will touch a bit more on that and Brazil still managing to grow, but note that the US is the biggest export beef in the world on a value basis, so we know we were the dominant export are of high quality, green fed beef and we lead on total.
- [00:13:28.410]Erin Borror: value of exports and actually so far this year we're only second to Brazil on a volume basis.
- [00:13:34.470]Erin Borror: And on the flip side if you leave Europe together, then we're number two if you break it apart we're number one and again europe's.
- [00:13:41.370]Erin Borror: Somehow is still exporting more pork again you have some funny stuff going on with brexit in here and now the trade with the UK is also in this number, but Europe has been shipping heavily into China and i'll show you another slide on that.
- [00:13:57.060]Erin Borror: So for the US, the way I look at this is that exports have really been underpinning the growth in our beef and pork production because exports add value.
- [00:14:07.650]Erin Borror: Because our consumption here in this country has been relatively stable, although demand has been strong.
- [00:14:13.530]Erin Borror: The exports are driving the growth and we look back over the past five years and see that production of beef and pork has each increased by about 15% and at the same time, exports of pork increased by 39% and a beef by 18% again comparing that last last year's number 220 15.
- [00:14:34.890]Erin Borror: And this comes with a really stable US domestic market, which is entirely good news, if I showed you a slide of the other major exporters'.
- [00:14:43.320]Erin Borror: they've pulled product away from their domestic market, so, in a sense, consuming less within for example within Brazil within Europe.
- [00:14:51.360]Erin Borror: and shipping more of that largely to China in this country, we still feed our domestic market very steady levels and again that growth in production goes largely to export.
- [00:15:06.120]Erin Borror: So we look in here at cattle prices around the world, there were significant impacts of Kobe last year, not just in this country but everywhere, everyone dealt with the challenges of how do we.
- [00:15:17.730]Erin Borror: me and these plants safely, how do we get workers to be able to work in a safe environment and the timing of these.
- [00:15:25.320]Erin Borror: disruptions are situations varied it hit here in the states and in Canada.
- [00:15:31.890]Erin Borror: Probably some of the first to be impacted and then we saw it happening in Europe and South America, as the months went on.
- [00:15:38.760]Erin Borror: So everyone dealt with this and adjusted accordingly, but the good news is that cattle prices are sharply higher than last year, you know that, especially in our competitor markets.
- [00:15:49.080]Erin Borror: It what it is, and so the lighter blue and the Green our last month and then this past week and the dark blue is last year, and so i've noted here the sharp increases.
- [00:15:59.790]Erin Borror: Compared to a year ago and, again, this is a really tight supply situation even coming out of South America, which we never seem to think of us, you know not producing more.
- [00:16:09.210]Erin Borror: And, as we know, this is kind of part of what's happening with corn prices at least the market was pricing that smaller crop out of Brazil.
- [00:16:18.090]Erin Borror: The smaller winter corn crop well that has impacts, you know in South America as well, so the dry conditions meant less cattle.
- [00:16:26.010]Erin Borror: slaughter ready, and that has limited brazil's output and that's been pushing these prices sharply higher.
- [00:16:32.760]Erin Borror: in Argentina, my understanding is they had some.
- [00:16:35.190]Erin Borror: Late rains that helped the pasture conditions, but again now you're into kind of frost and winter and it's not really conducive to holding cattle like producer trying to do right now to weed out the government's export ban.
- [00:16:47.010]Erin Borror: But they were able to manage through but production in Argentina was already forecast lower for this year, they had a pretty heavy calc he'll run.
- [00:16:54.780]Erin Borror: fourth quarter of last year and then we're going to talk more about Australia, but Australians are big competitor.
- [00:17:01.860]Erin Borror: And typically we have had higher prices in Australia, this is just a rough carcass price so don't take the actual dollars I didn't convert them to you or two pounds for you, because.
- [00:17:11.940]Erin Borror: I don't want you to hang too much on the actual dollar amount, but the trends are what are important what's important here, and this Australian price has run sharply higher since last year.
- [00:17:22.410]Erin Borror: And been higher than the US, and this is, as you can see an anomaly.
- [00:17:26.460]Erin Borror: This is what happened when we were in our last heard rebuild and there's a chance we switch places here in the next couple of years, so Australia is in a good wet strong rebuild.
- [00:17:36.210]Erin Borror: But they have sharply lower cattle inventories which we'll talk more about in a moment, and on the hog side it's again a case of much stronger prices so.
- [00:17:46.800]Erin Borror: over here you have big importers that are always high price, compared to the major exporters'.
- [00:17:52.650]Erin Borror: And in Korea on strong domestic demand for domestic work has been the case since last year and in Korea kind of unlike Japan.
- [00:18:03.330]Erin Borror: The chilled market is almost entirely domestic and when they lost well when kids stayed home from school.
- [00:18:10.710]Erin Borror: You saw that Korean ham and picnic product going into direct competition with imports from the US so it's been a whole like read juggling of the Korean market.
- [00:18:20.640]Erin Borror: And that's supported their home price, even though production is continuing to grow and it's kind of a fascinating case because the Korean market is liberalized repay zero tariff into that market.
- [00:18:31.110]Erin Borror: So it's a very interesting situation but it's it's not really knew I mean they're always much higher price than we are in this country.
- [00:18:40.860]Erin Borror: In Japan, I expect this price to jump on right now, as we speak, these prices usually require into the summer and japan's kind of been similar to Korea, where domestic work has been very popular through the pandemic.
- [00:18:54.810]Erin Borror: And because it's such a good, you know retail item but in Japan we've also seen our exports be quite strong.
- [00:19:02.160]Erin Borror: Because they are also consuming more of that process work in so we ship things like ground season work for use in Japan sausage production.
- [00:19:10.800]Erin Borror: And those volumes were near record large last year, and we also ship to work for table meat which has been really strong.
- [00:19:18.150]Erin Borror: what's limited us in Japan is really our limited Labor availability in this country and that's challenged our ability to bone out to add value to these cuts and that's when Japan prefers so you've seen some more Mexican to work go there, because of their Labor advantage.
- [00:19:33.960]Erin Borror: And in China we'll talk more about this, but this is the big thing that we're always watching, but really watching at the moment is this China hog price break.
- [00:19:43.650]Erin Borror: break much lower and that could re org or everything for the next couple of years, not totally unexpected, but the timing, I would say is earlier than we anticipated.
- [00:19:53.940]Erin Borror: And we could still see volatility in here Vietnam again nsf situation press is moderating but still historically high and they're importing a lot of work, interestingly from Russia, new player.
- [00:20:07.860]Erin Borror: And from Europe, of course, and we are at a tariff disadvantage in this Vietnamese market.
- [00:20:13.440]Erin Borror: Taiwan is another case for it to get into today.
- [00:20:17.070]Erin Borror: A mess in the sense of pork Mexico very interesting they had disease issues this past winter that's led to a hole in their domestic supplies as we speak in a sharp jump in prices in April.
- [00:20:30.600]Erin Borror: And they're off take of us work has been really strong I have them sharply higher for this year.
- [00:20:36.000]Erin Borror: Columbia has also seen higher prices it's kind of pent up demand they they're important slow last year with code and they need the product, despite challenges in that country at the moment.
- [00:20:47.400]Erin Borror: So we're also doing more to them sheila has been exporting so much to China, they really shorted their domestic market, and then you have US and Canada.
- [00:20:55.890]Erin Borror: sharply higher after a rough year last year, and again we talked through this but that strong demand within North America, as well as international markets and in Europe we're going to talk more about this in a moment, Brazil, also shipping dramatically more into China.
- [00:21:14.430]Erin Borror: So i'm jumping around here because i'm kind of trying to do, beef and pork and keep them together, but now we'll talk a little bit more on the beef side.
- [00:21:22.230]Erin Borror: So, as I mentioned the beginning china's super bullish for us beef, I meant to format this and make it pretty sorry but I pulled some slides from our China team.
- [00:21:31.950]Erin Borror: and explaining a bit about what they're doing in the market.
- [00:21:35.310]Erin Borror: But you see here, are you know game changing usp exports to China and the phase one was implemented here in late March of a year ago, and you saw the volume slowly gain momentum.
- [00:21:46.710]Erin Borror: Because this is still wrapped up in pre cattle and because the plants need to be able to do Chinese labeling they need to do a lot of stuff to be able to ship to China so it's not like a switch you flip on and off.
- [00:21:59.100]Erin Borror: But you are just going back to the people out level now rather than the birth farm and a much smaller added cost to doing the type of business than it was pre phase one agreement.
- [00:22:10.110]Erin Borror: And so we've seen this play out in the numbers, and this is my April estimate and for the year I have us.
- [00:22:18.570]Erin Borror: Actually, I have a closer to 140,000 tons now, but between 120 and 140,000 times to China up from 40,000 Times last year.
- [00:22:28.440]Erin Borror: And we're essentially doing more in a month, and we were in a year back in 2019 that's how much this business has grown.
- [00:22:35.790]Erin Borror: and Australia, has been the dominant supplier of China on a green fed basis, and you can see, we surpassed them, or we are surpassing them this year.
- [00:22:47.040]Erin Borror: We suppress them last Sep tember on a monthly basis and that has sustained this year so Australia, not only do they have tape suppliers, they also have.
- [00:22:55.620]Erin Borror: A very challenging relationship with China at the moment, and they have several plants suspended so much of their production cannot go to China, right now, even off that reduce production base, and so this has set up, you know huge demand for us beef.
- [00:23:12.540]Erin Borror: And again, this is kind of complicated slide, but if you just focus on the reddish maroon bars that's us beef into these top Asian markets and then the Green is Australia.
- [00:23:22.890]Erin Borror: So again, they are our primary competitor, especially in the Asian markets, and you can see, we have been the biggest supplier and you see this growth into USB into Korea, for example.
- [00:23:34.410]Erin Borror: will set another record this year after a bit of a slow down last year.
- [00:23:38.700]Erin Borror: And we dominate in Japan, again on the green fed same for Hong Kong and same for Taiwan so China was really the only one where we weren't already leading and again if you put this year's estimate in we jump all the way up to.
- [00:23:52.380]Erin Borror: You know hundred 40,000 times and we will also be number one grain fed supplier into that market as well.
- [00:23:59.070]Erin Borror: So for Australia and again, these are meeting livestock Australia forecasts and there are showing slaughter this year, the lowest in 36 years at 6.4 million head and down 11% from last year and that's a decrease of 2 million head from.
- [00:24:15.630]Erin Borror: And if we look ahead slaughter is not expected to exceed 7 million head, which is kind of the you know benchmark in here, although that 7 million is lower than where they've been not supposed to hit that until 2023.
- [00:24:28.800]Erin Borror: So we're looking at this window, you know lasting through next year and potentially even into 2023 of US beef.
- [00:24:36.810]Erin Borror: Filling that void of Australian product and not to mention this demand is you know still growing as well in these countries.
- [00:24:43.020]Erin Borror: And so they're exploiting less on a live basis to which has impacted in the southeast Asian markets places like Indonesia and Vietnam, which are heavily reliant on these Australian feeder cattle as well.
- [00:24:56.670]Erin Borror: But I also wanted to fly them to you that they are doing grain fed production at a much higher level than historically and because of the decrease in the grass fed output, because those people are going to her rebuilding.
- [00:25:09.330]Erin Borror: Grain fed is accounting for a bigger share of their production and they've been able to stay in this sustain this catalog feed number at over a million head on feet, at a time.
- [00:25:18.930]Erin Borror: And their total grain fed slaughter total over 3 million head I 2019 and 2.8 million head in 2020 so there was a bit of a slow down on the grass fed side and not too much.
- [00:25:30.750]Erin Borror: and green fed accounted for 41% of slaughter in the fourth quarter of last year, up from a third in 2019 so we kind of think of Australia well if tried to position themselves as grass fed.
- [00:25:42.000]Erin Borror: clean green that's what they marketed against us coming back from BSE and in reality they are discovering the green fed advantages.
- [00:25:51.930]Erin Borror: And you also see a preference by packers to have these catalog feed so that they're not going through this huge you know variability in having cattle there to slaughter.
- [00:26:01.740]Erin Borror: And so again they're running this new campaign which i'm kind of flagged for us to be aware of, because now, now they are doing some of this Green fed marketing as well.
- [00:26:12.690]Erin Borror: But again it's going to take time to bring this forward back from its historical low and female slaughter had still accounted for a huge share of slaughter, even through last year, so for rebuilding aggressive now on, but kind of has just gotten underway in the past several months.
- [00:26:30.090]Erin Borror: On Argentina, we don't think of Argentina per se, as a direct competitor, the place, we can beat the most would actually be in Europe, I would argue.
- [00:26:38.970]Erin Borror: And now that we have our own share of europe's duty free photo which i'll show you an image on that as well we're kind of sheltered from that in a bit.
- [00:26:49.440]Erin Borror: ran away but Argentina is still important in on the global scene and I have them, accounting for about 8% of global beef exports last year.
- [00:26:58.860]Erin Borror: And they are the second largest supplier into China after Brazil, so this product going into China is priced less than half of what our usp went into China is priced out so we don't compete at all in the Chinese market.
- [00:27:12.990]Erin Borror: So we won't be filling a void there, but what the what the Argentine Government did was suspended most exports for 30 days.
- [00:27:21.300]Erin Borror: In an effort to stabilize beef prices in that country, and this is a failed policy they've done it before.
- [00:27:28.050]Erin Borror: it's quite devastating for producers there and the producers are you know protesting so they're trying to hold cattle right now on plants trying to you know.
- [00:27:37.560]Erin Borror: Just suspend slaughter until some agreement can be reached.
- [00:27:41.790]Erin Borror: And the the situation, Argentina, you know I showed you the current situations terrible inflation is rampant it's like 50% the peso has devalued, it was at 20 pesos to the US dollar back in 2018.
- [00:27:56.040]Erin Borror: Now it's more like 95 on the official rates, maybe double that i'm officially so it's really challenging situation, and this is just one government effort to try to.
- [00:28:06.000]Erin Borror: appease the voters in a way, and it has backfired before it will backfire again back in oh six a similar effort was undertaken you some major her liquidation in 2009 that also underpin Lord directs boards.
- [00:28:21.360]Erin Borror: And then I don't have production in here, but it pretty much mirrors this production dropped sharply and then they had just started to rebuild production and exports.
- [00:28:29.670]Erin Borror: quite strongly and again a week paste so also favors exports a challenging domestic situation just favors you know shipping to the person that can pay for your product.
- [00:28:38.460]Erin Borror: And so that's when I say our strong US domestic market is is such a huge benefit we're in such a much better position because of our strong American market.
- [00:28:49.380]Erin Borror: Okay, so USB exports, again we have these experts, we were up about 10% we revised yesterday we finished our spring revisions and now it's closer to 9%, but I could easily put us back at 10 to 11% where I had us a couple months ago.
- [00:29:07.320]Erin Borror: We pulled back a little bit on the US price level, so our short play prices which you don't see that price it's an international price but.
- [00:29:15.690]Erin Borror: it's like $3 and 20 cents a pound, it was like 175 so this Asian demand is just insane but at some point you do start to hit on that price.
- [00:29:26.670]Erin Borror: Where your movement of that product into like every kind of usage does start to come off a bit so that kind of factored into our our pull back a bit, but so growth of 9%.
- [00:29:40.290]Erin Borror: I would say i'm pretty confident on at the moment, you also have the shipping the logistical challenges which is factored in here as well.
- [00:29:46.920]Erin Borror: And might have taken the edge off of that upper range of up closer to 11% but still looking at $8.7 billion, a 14% increase again on those higher values, and these are will be new records and again your China.
- [00:30:01.380]Erin Borror: Hong Kong combined here, but this number is a lot of the driver, but you also know, growth, widespread, I have a slowdown to Canada that's part of canada's production.
- [00:30:11.190]Erin Borror: rebound and recovery a slowdown to Taiwan, this is almost entirely their inability to get product which is partially related to listen so just to go challenges.
- [00:30:21.180]Erin Borror: And you have in here now, a pretty serious pandemic situation which is really hitting food service which had been just rocking up until a couple weeks ago.
- [00:30:29.610]Erin Borror: And then, Africa, this is variety meets this is kind of a shift back into your into the Middle East sorry.
- [00:30:36.030]Erin Borror: And in Europe it's also a case of food service just being destroyed by the pandemic and we'll touch on this a bit more, but otherwise I mean widespread growth so China and Hong Kong are the biggest growth drivers, but we have strong demand around so much of the world it's kind of amazing.
- [00:30:52.890]Erin Borror: And so I pulled these key trends out from our Korea office and just wanted to hit on quickly, because they have play in some way or another, around a lot of our markets.
- [00:31:04.260]Erin Borror: And that's the fast delivery, this is actually pretty unique to Korea So if you drive from one end of the country to the other it's like five hours.
- [00:31:13.980]Erin Borror: So they can do E commerce delivery within like two hours or certainly by next morning it's mind blowing and they basically don't charge there are not delivery fees it's so competitive.
- [00:31:25.470]Erin Borror: And so that has been a really key trend i'm this is pre coated Korea was already the most E commerce driven market before the coronavirus and it's just continuing to grow through it.
- [00:31:35.820]Erin Borror: And our staff expects continued growth this way partially for convenience too, so if I go to costco and Korea.
- [00:31:42.030]Erin Borror: I wait for maybe two hours to park and then I wait in line to check out for like another two hours and costco still does almost all their business in the store.
- [00:31:51.240]Erin Borror: So that just tells you their strength as a as a company, but really most everyone else has had to shift to at least hybrid retail and online and then trying to make.
- [00:32:01.020]Erin Borror: shopping in store more of an experience and now you're seeing some of the Atrium style shopping and outdoor partially because the virus, but they were already trying to make shopping.
- [00:32:10.020]Erin Borror: In the store and experience to get you in there, otherwise you're going to do, E commerce all day long.
- [00:32:15.240]Erin Borror: Prior to the pandemic our staff, I asked them, the last time I was in in the country, how many of them bought their groceries online they all did.
- [00:32:23.580]Erin Borror: Well, so So this has just kept on going through the pandemic and the other thing that really benefits us is the desire for high quality and fresh food which they also buy online.
- [00:32:34.950]Erin Borror: And that's your us chill beef which is setting new records every year into Korea and then the new thing that's really cropped up is this ECO friendly and sustainability.
- [00:32:44.100]Erin Borror: So in Korea this even includes things like.
- [00:32:46.800]Erin Borror: Trying to have better, more earth friendly packaging on all of these E commerce things because they realized with e commerce, you have so much packaging.
- [00:32:54.600]Erin Borror: And when you're paying for your trash every day that also gets you in the pocketbook, and so the play on sustainability in these big you know urban areas is maybe different than what we think of.
- [00:33:06.330]Erin Borror: But we're also trying to answer questions before they have them on the sustainability friends the sustainability of beef and pork production.
- [00:33:13.620]Erin Borror: So our staff did a video on sustainability on earlier this year and use the information coming out of and tba and pb and translated into.
- [00:33:26.250]Erin Borror: Korea friendly you know kind of terminology images and did these great videos and we continue to use, you know some.
- [00:33:35.100]Erin Borror: degree of sustainability in our messaging and again trying to get ahead of this before it's even an issue in markets like Japan, Korea, Taiwan.
- [00:33:44.430]Erin Borror: And then the other thing just to note the bone is just been on fire, so those big tomahawk they sell at costco.
- [00:33:51.000]Erin Borror: And they have been doing, I don't know I didn't include I guess they've been doing these great YouTube videos with the big podium products and.
- [00:33:59.910]Erin Borror: Just really cool the things that are going on in Korea and more on feeding kids so since these kids were home from school, this is the La gabi read and children's style so focusing on using meals, for having those kids at home, using us beef and pork as well.
- [00:34:18.360]Erin Borror: um let's touch on Europe right quick just because for anyone producing any htc.
- [00:34:23.820]Erin Borror: There is so big potential in this market, and this is because of the US share of the quota, which was implemented January 2020.
- [00:34:33.150]Erin Borror: So we had been competing against Argentina, Uruguay and Australia, for what I see is our quota, which was part of the agreement on the wtf hormones case.
- [00:34:44.100]Erin Borror: And they were eating our lunch, they were shipping and much cheaper product, and we were losing market share So these are are are europe's importance of US beef.
- [00:34:51.840]Erin Borror: And even through the pandemic we stabilized with that new agreement, and this is the quota that's available for us will need duty free.
- [00:35:01.860]Erin Borror: beef into Europe as we look ahead and so huge potential to grow in this market once these restaurants get going again Europe is hit some of the hardest in the world, as far as food service.
- [00:35:13.290]Erin Borror: And in Europe, as you know, there's they're not geared toward to go, and so there was this whole effort by our team to.
- [00:35:20.820]Erin Borror: educate on how you can sell usp at retail I mean we've been trying to penetrate retail, but until we had this share the quota they didn't know how much usp they would have they were trying to.
- [00:35:30.570]Erin Borror: Land product at the start of each quarter and then have to live on that be for the next three months, which chilled product it's very hard to do so.
- [00:35:38.700]Erin Borror: Retail is relatively new partially because of that situation, and so we had to like hit the ground running and try to educate on how you, you know manage this product.
- [00:35:48.510]Erin Borror: And the distribution wasn't really set up for it, you know, none of this, so I think there's silver lining here is that all of the effort that's been done to get usp that retail will sustain and online as well.
- [00:35:59.970]Erin Borror: And then, once food service comes back, we do have you know that growth potential as well, so it looks optimistic as we get out here to 36,000 times available for us by 2026, and this is the biggest.
- [00:36:13.110]Erin Borror: Duty Free access into Europe of anyone, so it is pretty exciting, even though it's been a real tough slog for the past year year and a half.
- [00:36:22.110]Erin Borror: As far as our exports, we aren't going to dive into this too much because I want to tell you a bit more about pork, but.
- [00:36:29.460]Erin Borror: What we export is generally kind of the outside, or the end cuts.
- [00:36:33.690]Erin Borror: We export heavily out of the short plate and heavily out of the rib everyone loves revised but that's less of what we export it's more like.
- [00:36:41.940]Erin Borror: rib short ribs which are almost entirely to export and then rounds into Mexico we're always trying to export more rounds and a ton of chuck cuts into these Asian markets.
- [00:36:52.740]Erin Borror: This is a huge part of the carcass and we're exporting all sorts of products, out of the check things that you and I don't even hear about chuck flat tail and stuff like this.
- [00:37:03.570]Erin Borror: And I tried to plug into here on $1 basis running out that dollars per head by primal.
- [00:37:10.320]Erin Borror: Actually, sorry that's over here, and here is your total primal value per head to give you some perspective as the value of this year was broke out using last year's average.
- [00:37:21.000]Erin Borror: And then, on an export basis by primal again so you can see it kind of broken out how those dollars per head land.
- [00:37:28.200]Erin Borror: And also just for clarification this $268 per head that's just your muscle kinds and that is simply the the value of our exports divided by fed killer in the same period it's nothing fancy it's not a true.
- [00:37:42.810]Erin Borror: Added value it's just to try to make our exports of $70 billion more tangible and then another way of looking at this is.
- [00:37:51.360]Erin Borror: The packers are required to report to usda their sales every day, and this includes export sales, so if we look at the first quarter those sales that were reported for export.
- [00:38:04.410]Erin Borror: Were 16% of total sales reported, and that was up from 14% last year that was sold for export so again this export demand has been really strong.
- [00:38:15.180]Erin Borror: And then we export luckily these edible variety meets, we have had a strong pet food demand and other things going on, plus limited Labor has.
- [00:38:23.940]Erin Borror: In some cases, her our ability to produce and save an export some of these products, but so we can't forget about the importance of being able to export things like livers.
- [00:38:35.310]Erin Borror: And then here's your dollars per head of exports trend over time So for me the end before it meets we're at $335 and 45 cents per head in the first quarter of this year and 12% of muscle cup production in nearly 14% when including writing meets again so far this year.
- [00:38:54.630]Erin Borror: i'm going to skip through this stuff, but I just wanted to flag europe's farm to fork deal as something that we should all as producers be watching mostly because the intent here is to reduce meat production and consumption they're black and white about this, and so it's fairly scary.
- [00:39:14.010]Erin Borror: And there are lots of things going on in Europe, but they are our biggest competitor on the pork side and so Africans wine fever in Germany.
- [00:39:23.280]Erin Borror: will limit their production, but they also have added production costs because of increased animal welfare requirements and increased environmental regulations on things like nitrates as well.
- [00:39:35.100]Erin Borror: So germany's production is in decline, expected to drop by at least 11% which is huge, I mean they're europe's biggest producer.
- [00:39:43.950]Erin Borror: And speaking at the same time, continues to grow and they've been the exception, and so they will pretty much offset the drop coming out of Germany.
- [00:39:52.230]Erin Borror: kind of stable production for the other big producers, and so we expect europe's production on the whole, to be somewhat steady but, again, depending on how much Europe is able to really increase the cost of production coming out of Europe.
- [00:40:09.030]Erin Borror: And Europe has been the biggest supplier into the Chinese pork market your Spain the dominant supplier and when Germany slowed down because China suspended imports when Germany got Africans mind fever, yes, China has Africans minute or two.
- [00:40:23.940]Erin Borror: doesn't matter, according to them, so so Spain is the dominant player I include this because China is important to us, but we are a relatively small share of china's imports we've been around 16 17% of their imports and what happens in China has a much bigger impact on our competitors.
- [00:40:42.210]Erin Borror: So china's hog prices dropping and has fallen now here down below 2016 levels and importantly it's now dropped below their cost of production, essentially, and we are all watching this wondering.
- [00:40:57.480]Erin Borror: What what next have they really rebuild this much We hear a lot of that didn't consumer demand for pork is.
- [00:41:04.140]Erin Borror: been hit hard because of sustain high prices for so long, there are a lot of things going on there's.
- [00:41:10.470]Erin Borror: Not much transparency into the market, and so we'll see if these prices bottom and start to rally in the back, half of the year, if there were disease issues this past winter, which is a thought.
- [00:41:21.840]Erin Borror: The futures market, the daily on hog futures is saying, prices will be above where they are now but somewhere around 20 beats per kilo.
- [00:41:30.000]Erin Borror: somewhere around US dollar 50 right now you're at US dollar $28 30 or so live.
- [00:41:36.390]Erin Borror: So high prices, obviously, compared to us still but you're getting close to historical levels in, in which case imports were much lower than they are today.
- [00:41:45.510]Erin Borror: At the same time, this this corn price continues to increase and that's part of why you know breakeven costs are so high.
- [00:41:53.010]Erin Borror: And that's why you've seen this surge in china's import so here on the right side i'm including all of the Greens together.
- [00:42:00.630]Erin Borror: But note that we were the largest supplier in January, through April period of this year and in the fourth quarter of last year.
- [00:42:07.860]Erin Borror: And this is mostly you know us corn, of which were the biggest global suppliers so China has been playing product away from other importers as well, and everyone feeling the impact of higher prices due to this Chinese demand, which may sustain there's a big debate about that as well.
- [00:42:25.710]Erin Borror: so important to still been coming into China on the pork side because important prices have still been much slower than domestic wholesale.
- [00:42:33.240]Erin Borror: Prices but, as this gap narrows you should see china's pork import start to slow down and that's again what everyone is wondering, because their optic has been so massive.
- [00:42:44.370]Erin Borror: It will reverberate through the global market, but for the US specifically our exports to China have kind of stabilized and.
- [00:42:52.530]Erin Borror: At least in Q4 of last year, and almost regardless of what's been happening with our prices in with china's prices we've been shipping relatively steady volumes into China.
- [00:43:02.340]Erin Borror: And so, for this year I have us down significantly down about 10% but that's kind of holding at these levels.
- [00:43:10.560]Erin Borror: And so, our bigger concern is what happens to everyone else's pork of China really slows down.
- [00:43:16.560]Erin Borror: And again, I mentioned this earlier but type supplies in Mexico, which help underpin our growth to Mexico this year forecast up 10%.
- [00:43:24.240]Erin Borror: China off nearly 10% growth into much of the rest of the world, so again, Mexico, meaning product.
- [00:43:31.620]Erin Borror: Which is important, those bone in hands need to go to Mexico because we don't have the Labor.
- [00:43:35.820]Erin Borror: And then places like Southeast Asia, this is the Philippines, because of their asm situation they reduce tariffs temporarily to be able to bring in more product and help to try to stabilize this prices for Filipino consumers.
- [00:43:48.450]Erin Borror: Central America has been fantastic and our staff down there has been doing an awesome job of getting product across the whole region and they've also seemed to be an import deficit situation.
- [00:44:00.780]Erin Borror: So we've been working to educate on the health of us for and across Latin America they're huge misperceptions about for being unhealthy.
- [00:44:10.890]Erin Borror: And so we really hit on that and social media has been kind of a blessing because we've been able to reach consumers, you know actual consumers and to provide not only recipes.
- [00:44:20.220]Erin Borror: But the health attributes of us work and then work we're direct them toward where they can buy our product and then you've seen the growth in sales again across the region.
- [00:44:33.720]Erin Borror: Alright, so for for the poor excited it's similar so we export heavily out of these n cats less preferred by us, consumers and at least 40% of this ham, is going to export Mexico and China, being the top destinations.
- [00:44:50.250]Erin Borror: and on but product it's mostly into northern Asia, Korea and China and Japan all love this product picnics go pretty much everywhere.
- [00:45:01.440]Erin Borror: This is the ingredient for ground she's important to Japan, for example, and then on the middle of the pig since Americans love these products they're generally higher priced and we have a hard time competing with Europe, but we still export heck of a lot of things like spare ribs.
- [00:45:17.430]Erin Borror: More than you would imagine human into Latin America, China loves the ribs obviously.
- [00:45:22.350]Erin Borror: And then loans were heavily reliant on Japan, but we've been working to build demand for this product and Mexico, especially the phone in and then Canada, of course, is a good market for our lines as well.
- [00:45:32.280]Erin Borror: and Belize everyone wants them, but again we're usually high and volatile pricing, but certainly shipping these into Japan and Korea and China as well.
- [00:45:42.570]Erin Borror: and variety means same thing absolutely critical really adding value on these products, even when the China market pools there's generally still demand for things like feet and stomachs which are heavily into China, Mexico, being a big tip ticker across the board as well.
- [00:46:02.220]Erin Borror: And then, just to wrap up on next $4 per head.
- [00:46:05.820]Erin Borror: You can see where the dollars per head on export it peaked here with PD in 2014 this was partly our high prices versus reduced slaughter and exports continued because a lot of our customers were also suffering from the PT virus.
- [00:46:20.310]Erin Borror: But now we're building back and will be probably over $61 a head on average for this year we were 6186 in the first quarter.
- [00:46:27.660]Erin Borror: and exports, accounting for about 27% of pork production and we add in writing it's closer to 30% export here in the first quarter of this year and, last year we had moved to a new high with those record export volumes so.
- [00:46:43.350]Erin Borror: I will wrap it up there and happy to take any questions thanks.
- [00:46:50.310]Elliott Dennis: Thank you earn your long experiencing us me F is really showing through thanks for presenting that as a reminder, if you have any questions for Aaron please put them in the chat or the Q amp a and then I will feel them in and.
- [00:47:09.270]Elliott Dennis: asked him to.
- [00:47:11.850]Elliott Dennis: Just to begin what everyone's typing Maybe you can talk about what's changing from the consumer side, why is there such a desire for grain finished both pork and beef products and what's happening with consumer on why the US is able to actually.
- [00:47:31.140]Elliott Dennis: ship that product, because it relates to consumer is developing the taste preferences for this.
- [00:47:37.770]Erin Borror: yeah thanks so yeah I think it's been you know it's been a trend that's been underway for the past couple of years, certainly and.
- [00:47:49.020]Erin Borror: I recall being in Korea will say, which was another real demand driven year and.
- [00:47:56.760]Erin Borror: It was like the light went on so we've been educating but, like, for example, if we started doing stick cuts, and this is in Korea and Japan, I use them a lot because they're big markets, but if you know this kind of applies around the world.
- [00:48:12.570]Erin Borror: But I saw more cuts available at retail in in our markets than we'd really had before so it's it's it's also helpful to talk about user because it's different than what we're used to here.
- [00:48:23.850]Erin Borror: So in these markets, they have thin slice product typically which you know is convenient but we don't sell as much usually and it's Labor intensive for those retailers who have been short on Labor like for years.
- [00:48:37.590]Erin Borror: So we introduced these state cuts or block cuts, as they call them in Japan and we taught consumers, how to cook them.
- [00:48:43.800]Erin Borror: They realized how easy it was how kind of novel, it was because again this wasn't really in the market.
- [00:48:49.740]Erin Borror: And, along with that we've been really plugging away on the nutrition message as well, so you've seen the protein based diets the recognition that protein is so healthy.
- [00:49:01.830]Erin Borror: And then, with the covert situation there was increased awareness on like the vitamin and mineral side of it, too, which obviously we have the perfect nutrition package.
- [00:49:11.820]Erin Borror: And having those readily available nutrients that you have to eat, you know so much beings or peanut butter or whatever, and you can't, then you have to take vitamins to get the you know the vitamins and minerals so.
- [00:49:25.050]Erin Borror: This had been you know underway with the consumer, recognizing the convenience the deliciousness the availability of a wider range of cuts and in kind of cut styles and then you add on to it.
- [00:49:39.540]Erin Borror: That I guess increased attention to health, specifically and it's like in the US and we saw consumers wanted our product right and that's what shelves would bear.
- [00:49:50.220]Erin Borror: An initial kind of co been shut down to lock down or whatever so that's played around the world and.
- [00:49:57.780]Erin Borror: I also think, with social media and E commerce were able to tell our story again direct to consumers so having these offices in these countries and.
- [00:50:08.400]Erin Borror: Again, they know where they can anticipate what consumers might be thinking or asking about and they can package, all this up into domestic.
- [00:50:17.250]Erin Borror: Not just translating into Spanish or Korean or whatever, but you know, the way that those consumers think and so.
- [00:50:24.600]Erin Borror: it's been against social media is we've been using it, but you really got any life right with the pandemic so.
- [00:50:30.990]Erin Borror: Things like the short YouTube videos on recipes we've been rolling those out for a couple years now, at least, but that's like.
- [00:50:38.190]Erin Borror: Again, full shift and get the pandemic, so I think it's something that's been building and again in 2018 it was kind of a wake up like wow This demand is stronger than you thought.
- [00:50:48.090]Erin Borror: And you had a bit of a low in 2019 last year some disruption, but then consumers coming back and strong.
- [00:50:55.020]Erin Borror: Just you had to kind of see these supply chain issues work their way through everything but yeah it's it's a bit complicated.
- [00:51:03.960]Erin Borror: But it's something that's been underway and not not really unlike what we've seen here stateside as well, and I think what was really exciting to me is that.
- [00:51:11.880]Erin Borror: Even though food service was challenged around the world, consumer still bought and cooked our product at home or bought it for take away, you know, whatever platform, but.
- [00:51:21.780]Erin Borror: We were initially we were barely worried about a big slow down because of the loss of food service in because our product may not always be what you order, particularly.
- [00:51:30.720]Erin Borror: But clearly, you know we held up through it and a lot of that retail growth offset the slowdown in food service sure okay great.
- [00:51:39.660]Elliott Dennis: So building off of that.
- [00:51:42.420]Elliott Dennis: We have some concern here in the US that with fake meats and more protein based need or.
- [00:51:50.070]Elliott Dennis: That is potentially going to carve away some of the domestic market what's uh what's kind of is there a similar concern internationally, that is his products these products start to take way as they start to push sustainability issues.
- [00:52:07.230]Elliott Dennis: How does that go to How does that fake meat play internationally and potentially affect export markets it to another so i've been working to build.
- [00:52:17.490]Erin Borror: yeah it's a great question I would say, we did a panel on this one of our board meetings must have been following, I think.
- [00:52:29.250]Erin Borror: And at that time our staff was like yeah it just doesn't really fit in any of our markets, and you know, we had like Mexico, Europe was the one where obviously.
- [00:52:39.480]Erin Borror: You can imagine, I think we had Mexico Europe, Korea and Japan on our panel and pretty much everyone was like yeah we're kind of watching it but it's really a US and Europe thing.
- [00:52:51.570]Erin Borror: And now I see, so our most of our team reports in globally, you know overnight if there's something really newsworthy at least once a week and you see these products coverage like regularly.
- [00:53:05.430]Erin Borror: Now we see coverage all the time, what does actually translate to I mean here in the US, you know it's on the news what non stop, and we know that our consumption or our demand more importantly.
- [00:53:15.720]Erin Borror: For red meat has grown it's you know essentially record levels right so it's a threat, the way that we've looked at it is.
- [00:53:25.980]Erin Borror: To try to just be that much better so to market even more on the positive attributes I don't see any use in attacking the other products.
- [00:53:35.340]Erin Borror: But again, to sell the benefits both environmentally and health wise 100% convinced we have the superior product, so we sell it.
- [00:53:44.430]Erin Borror: And that's the the aim that we have taken, especially because these products aren't really I should have included a slide I have a slide from a trade show in Japan, a couple weeks ago, and there is like a small area on the fake meat products.
- [00:53:58.770]Erin Borror: And it's a locally produced, which I think is this is where it gets interesting because countries that aren't blessed with natural resources, like we are.
- [00:54:07.170]Erin Borror: If they're able to produce these fake products to try to you know, improve their self sufficiency or capture some of the value domestically What, however, you want to look at it that's where it gets interesting to me.
- [00:54:20.220]Erin Borror: But still, is very small, little part of the Shell from a domestically produced.
- [00:54:25.290]Erin Borror: Alternative meat protein alternative protein thing i'm in a bigger shelf space for like no nitrates and that kind of thing so that bit of the more natural product is still gaining momentum in like Japan.
- [00:54:38.820]Erin Borror: And there's some kind of trial on the pig products The other thing to remember is these consumers in Asia they've eaten the plant based products, their whole lives so things like tofu like if I want to not eat me I can eat.
- [00:54:50.550]Erin Borror: being heard or tofu or you know, whatever the vegetable based products have been there forever so they even they had enough money to be able to eat meat, so what we train back down.
- [00:55:02.340]Erin Borror: Possibly and possibly if the misperceptions you know about it's better for me or the planet to get out there, but.
- [00:55:10.620]Erin Borror: At this point it looks to be just on the fringes but it's gaining more I won't even say traction it's getting more awareness, because of the wide publicity here.
- [00:55:21.390]Erin Borror: Which is anything but, again, what i'm going to watching is the domestically produced and then, if we talked about cell cultured I.
- [00:55:28.710]Erin Borror: it's still a bit too far off, but you hear places like Singapore euro natural resources, huge technology hub that could get very interesting.
- [00:55:39.330]Elliott Dennis: Great as a reminder, if you have questions for air and put them in the chat or the Q amp a box in and we'll and we'll get them passed on to her.
- [00:55:51.840]Elliott Dennis: And there's there's often a thought about.
- [00:55:54.960]Elliott Dennis: Really capitalizing on markets that we have insistently so selling more product into Japan and continue to grow that market verse trying to find other locations to continue, so the market.
- [00:56:08.490]Elliott Dennis: One of the statistics that has been passed along has been you know the growth in the next 3040 years is globally, is going to come from Africa and and the populations and in Asia are going to slowly decrease Maybe you can talk a little bit about that that.
- [00:56:29.850]Elliott Dennis: The potential risk or what us me F is doing to potentially grow those markets, given that so much of our product is sold into basically the Asian markets.
- [00:56:42.030]Elliott Dennis: with potentially declining populations over the next 30 years.
- [00:56:47.880]Erin Borror: yeah yeah for sure ma.
- [00:56:51.540]Erin Borror: I also should have added that because we also watch the forecast growth in wealthy household so like homes with incomes at 25,000 or more, and you see.
- [00:57:03.840]Erin Borror: growth potential near term, especially in like Southeast Asia and Africa be being further out like you said, and so, for us, I mean, especially for beef population kind of important but income is really what matters because we have you know the high price product so.
- [00:57:22.140]Erin Borror: For variety means though definitely population and those meeting that that nutritional product Africa hugely important and on the pork side as well, so meaning to be able to capitalize on the growing consumption through both incoming population growth so for us m E, F on we have.
- [00:57:46.020]Erin Borror: You know positioned ourselves around the world, for that reason, so in Africa, we have matt Copeland T is amazing.
- [00:57:54.930]Erin Borror: Just fantastic and he is building building out, you know throughout the continent from Durban.
- [00:58:03.690]Erin Borror: and South Africa, you know being kind of the no brainer for us at the moment, we are doing more be flippers kidneys.
- [00:58:11.340]Erin Borror: Other grinding means into that market and again you saw kind of a switch with Egypt and in the forecasts that i'm showing here.
- [00:58:19.590]Erin Borror: But from what he's been saying, I mean there's enough demand down here, they just haven't been able to get the product so it's kind of our Labor issues in this country is part of this.
- [00:58:28.980]Erin Borror: But but yeah there's huge potential in in Africa longer term and even right now I mean from from what matt's been saying he's been working to.
- [00:58:39.150]Erin Borror: make the connection so kind of connecting again throughout Africa and then obviously linking up the US exporters' and traders with those customers in Africa, and you know most worthwhile ones to pursue that kind of thing so having a person like him on the ground, he comes from the trade.
- [00:58:55.860]Erin Borror: And he understands, you know South African culture and then across the region he's just priceless and I know he's going to pay dividends to the industry over the years, and he has set up this you know great like.
- [00:59:09.480]Erin Borror: me shop showcase kitchen all this stuff that you know just kind of blows my mind so that's working on places like Central America, I mean we don't have to look beyond our doorstep, to see the potential for opportunity.
- [00:59:23.070]Erin Borror: Across Latin America and that's been a case where I often domestic production, especially on the work side has been growing but it just can't keep up with demand.
- [00:59:33.270]Erin Borror: So we've been exporting into these markets as well and, generally, we have free trade agreements, so with Central America.
- [00:59:41.040]Erin Borror: With Dominican Republic with Colombia, Peru, Chile, and so we have dominant market share, because of our our trade ties there, so there is great potential in Latin America.
- [00:59:53.670]Erin Borror: And the other thing i'd say is usually costs a lot less to do the business in the emerging world so we're able to invest your dollars.
- [01:00:03.150]Erin Borror: Well, there for the longer term pay out because it's a relatively low cost investment and it's a lot of like man hours, so, if anything, our challenges getting the right people in those positions.
- [01:00:14.460]Erin Borror: Because it doesn't we don't need to throw a lot of money in advertising it's the people you know working at the ground level to make those contacts.
- [01:00:22.320]Erin Borror: And that's you know where these things start so yeah that's why we're invested around the world and it's to have that longer term play and the diversification and recognizing everybody has different tastes and preferences and seasonal.
- [01:00:35.970]Erin Borror: influences as well.
- [01:00:38.400]Elliott Dennis: Well, thank you, and this has been really great and Thank you everyone who's been joining with us today, I want to remind everyone that a recording of the webinar will be posted at farm you and know that you.
- [01:00:49.170]Elliott Dennis: And you can also register there for more upcoming webinars and Please see the chat box right now for a link to a brief survey about today's webinar we really appreciate your feedback to inform future sessions and so that we can provide the most up to date information as possible.
- [01:01:06.630]Elliott Dennis: thanks again for joining us and we hope everyone has a great rest of the day.
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