1 Philip Seng President and CEO U.S. Meat Export Federation IMS Regional Conference Rome, Italy October 2005 The European Union in the Global Meat Complex

Global Trends

The next 25 to 50 years Population Resource management Technology Knowledge Economic integration Conflict Governance

What is the Market Potential?

FAO Meat Consumption Estimates Source: FAO +34% +108% +30% +57% +22% +44% +22% +64% % change from base year +29% +67%

The EUs Role

Global Red Meat Consumption Rest of World EU-15 Source: FAO

2005 Key Importers Source: USDA

2005 Key Exporters Source: USDA

2005 EU Meat Balance of Trade Source: USDA

Current EU Red Meat Situation

Source: USDA, FAO EU-25 Total Cattle: 88.4 million PCC – Beef: 19 kg Self-sufficiency: 98.3% (05 est)

Source: USDA Value of EU beef external imports in 2004: US$1.7 billion

Source: USDA, FAO EU-25 Total Hogs: million (2004) PCC – Pork: 44 kg Self-sufficiency: 106% (05 est)

Source: USDA Value of external EU pork exports in 2004: US$3.1 billion

EU Beef Developments Gradual decline in beef numbers prompted by CAP (Common Agricultural Policy) reform –decouples subsidies from production –Implementation due by 2007 UK – Over 30 Months restriction to be lifted ( k mt in 2006) Availability of commercially-priced beef from outside the EU, particularly South America BSE decreased production and consumption in the 80s and 90s Accession of new member states will not materially alter the dynamics

EU Pork Developments EU pork production growth rate has slowed –EU-15 pork up to 18 mmt from 10 mmt in 1970 –Flat growth since 1999 –Common Ag Policy affect? Spain pork production –Avg increase of 6% annually since 70 –18% average annual export growth 02-04

Source: USDA

EU-25 Buying Beef From: Source: Global Trade Atlas 196,900 mt increase for S. America

EU-25 Selling Pork To: Source: Global Trade Atlas

Trade Implications

Emerging Market Access Issues As tariffs fall, countries find other ways to protect their domestic industries –Questionable sanitary standards Hormone ban, disease restrictions, zero tolerance –Technical barriers Burdensome paperwork, slow approvals –Anti-dumping measures Traditionally used by developed countries Developing countries starting to use As Tariffs Fall…Other Measures Rise Source: Cato Institute

Number of New SPS Issues Raised Each Year Source: WTO

Specific Trade Concerns by Product Source: WTO, measures

Threats to Global Meat Trade Animal Health / Food Safety Issues –FMD: 13+ countries affected – multiple species –BSE: 24 countries affected comprising 33% of global exports –Avian Influenza: 17 countries affected comprising 53% of global poultry exports –Animal diseases currently threaten 1/3 of global meat exports with losses valued at $10 billion

Impacts Canada – Exported 47% of production prior to BSE; dropped to 32% U.S. – 2003 value of exports was $4.2 billion; decreased by over 80% Japan –Estimated that the food industry in Japan will lose $5 billion due to bans on U.S. and Canadian beef Source: Cattle-fax; UFJ Institute

Trade Concerns Reported Solved After 10 Years Source: WTO

Summary Scientific Basis Is Vital Science Can Quickly Become Political Consumer Perceptions Are Key / Understanding Culture It is the Industrys role to provide the necessary information and knowledge to consumers to convey the validity of globally accepted standards

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