A steadily increasing world population and growing hunger for beef has set the U.S. beef industry at a key player in the world’s meat export market.

During the, “Why are the Export Markets for Beef so Valuable?” breakout session at the 2015 Cattlemen’s College during the Cattle Industry Convention in San Antonio, Texas, a panel of three export veterans discussed the impact of the global demand on the U.S. beef market.

According to U.S. Meat Export Federation (USMEF) Sr. VP of Export Services Paul Clayton, the U.S. has a play of $7 billion in international exports of meat and $5 billion in the meat byproduct market. When it’s all said and done, this demand pressure is projected to bring $300 per head to a U.S. producer’s bottom line, he says.

While traditional beef cuts are sought after, the byproduct market has been a key player in increasing carcass value.

“This is referred to as drop credit,” Clayton says, which includes all parts of the animal that is not the meat carcass. This includes hides (the most valuable byproduct), organs, heads and tails, he says. Drop credit also covers rendered products such as blood meal, tallow and gel bone, along with pet food and pharmaceutical components. While prices change daily, Clayton says currently cattle hides account for 48 percent of the market; variety meats (tongues, liver), 33 percent; and rendered products, 19 percent.

Of the $5 billion in total byproduct sales, hides alone bring in $2.6 billion. The biggest markets are China, Hong Kong, South Korea, Taiwan, Italy, Vietnam, Mexico, Thailand, and Japan. Because environmental laws do not allow leather tanning in the U.S., often hides are shipped off to these countries to be processed before returning to the U.S., says Clayton.

Since 2011, drop credit value has increased from $0.27 to bringing home $21.86 in 2013. 

Also in for the discussion was Certified Angus Beef’s (CAB) Larry Corah – the branded beef program has a premium beef market presence in over 80 countries.

According to Corah, 80 to 82 percent of the global grain-fed beef is produced in the U.S., giving it a leg up on bringing the global market place the taste of grain finished beef.

A key difference in the domestic U.S. beef cut market compared to the majority of international markets in the consumption of ground beef products. While the U.S. consumes 58 to 60 percent of its beef cut market in ground beef, international markets tend to shy away from ground products, says Corah, noting out of the 882 million pounds of beef CAB sold last year globally, only 8 million pounds were ground. However, he projects a growing increase if the right education is provided on cooking methods with ground beef.

The last presenter on the panel was Jay Theiler of AgriBeef. The family operated company is unique in completing a full cycle of the cattle business in directly marketing from the cow calf sector to the consumer’s plate with multiple branded beef programs. Since the business is located in Boise, Idaho, its shipment port out of Washington puts them at key location for business with Asia.

“OECD projects the middle class purchasing power to increase by $31 trillion by 2030 – and 80 percent of that is expected to be in Asia,” says Theiler.

Theiler also remains optimistic about the possibilities of the Trans-Pacific Partnership if it is pushed through to an agreement of dropping export tariffs from 30 percent to 9 percent.

With the recent west coast port slow-downs, Theiler says exports for AgriBeef have taken a huge hit – with the company shipping product by air. According to Theiler, even if an agreement is met with port workers, it will take at least 45 days to get shipping back to normal. Theiler expressed how urgent it was to the U.S. export players as a whole for the issue to be resolved, encouraging the crowd to reach out to their legislative groups to get involved.