News & Events | USMEF Broadens Efforts in Vietnam

USMEF Broadens Efforts in Vietnam

Beef imports

Vietnam’s increased imports of U.S. beef and progress made on U.S. pork are among the major export success stories in recent years, and are indicative of the high level of interest and willingness to purchase U.S. red meats overseas once market access is established.

Vietnam’s economy is enjoying unprecedented economic growth, benefiting greatly from the boom of its northern neighbor, China, where rising costs are driving some labor-intensive light industries across the border into this nation of 85 million. Economic growth reached 8.5 percent last year, slightly below that of China but among the highest in the region.

Trade analysts express surprise at how fast Vietnam has developed as a major beef-trading nation. With almost no beef trade five years ago, the country has emerged as a major beef importer. To be sure, the country is serving as a beef entrepôt, while demand within the country is increasing as economic growth and inflationary forces make imports more competitive.

In 2007, Vietnam was the sixth-largest export destination for U.S. beef (excluding variety meats) on a volume basis, importing more than 11,000 metric tons (24.2 million pounds), or more than Hong Kong, all European Union countries and the entire Middle East. Trade numbers from other beef exporting countries show large shipments to Vietnam from India and South American countries, with India taking the largest share. For the first six months of 2007, Indian exports to Vietnam reached 14,863 metric tons (32.7 million pounds).

However, calculating what beef imports stay and are consumed within Vietnam is more difficult. The country’s long coast and geographic distance between northern and southern ports and markets make consumption tracking complicated. USMEF estimates that approximately three to four 40-foot container loads – or up to 80 metric tons (more than 176,000 pounds) – of U.S. beef are being utilized within the country itself per month. Exports are primarily frozen boneless beef (short plate) and both boneless and bone-in short ribs. Current access conditions allow U.S. beef and beef products to be imported from animals under 30 months of age, excluding specified risk materials (SRMs).

Most U.S. beef is consumed in small- to medium-sized Korean restaurants in Ho Chi Minh City (HCM). A smaller number of such establishments operate in and around Hanoi, the northern capital, but Ho Chi Minh is the center of U.S. beef consumption in the country. HCM importers estimate that Vietnam has upwards of 100 Korean restaurants servicing the tens of thousands of Korean expatriate residents. However, a local clientele is increasingly frequenting these outlets. In addition to the Korean restaurants, U.S. beef finds its way into Japanese restaurants, hotels and local Vietnamese establishments.

A growing market for U.S. pork

USMEF has worked with Metro, the German multinational retailer, to facilitate the introduction of frozen U.S. pork cuts, including ham end, brisket bone-in, back bone, CT butt, spare ribs and ribs end – at three outlets in HCM City. Vietnam’s pork and food prices have been rising steeply. In a situation not dissimilar from pork market dynamics in China, Vietnam’s pork herds have been hit with rising feed costs and disease, crimping output. Vietnam’sgovernment recently announced that its annual inflation rate had hit 14.1 percent, the highest since 1995. The country is suffering from the worldwide surge in the cost of fuel, and food prices are up by 22 percent year-on-year.

USMEF is aware that large Vietnamese meat processors are now more closely focusing on the pricing and competitiveness of imported raw material, whether it is Indian buffalo meat or U.S. pork picnics. The value of U.S. pork exports to Vietnam surged in 2007, growing more than 3,000 percent from $132,000 in 2006 to more than $4.4 million in 2007. Exports in January of this year hit 400 metric tons (nearly 882,000 pounds) worth more than $700,000. USMEF also notes that Vietnam has become a steady market for U.S. pork variety meats including uterus, heart and kidney.

Duties

The competitiveness of imported pork and beef has been helped by a recent decision to lower import duties in an effort to combat inflation. On Aug. 8, 2007, Most Favored Nation (MFN) tariffs of key agricultural commodities including meat, meat offal, eggs, milk products, vegetable oil and materials for animal feed were reduced by an average of 30 percent to 50 percent from the current rates. The MFN rate of bovine meat was reduced to 12 percent from the current rate of 20 percent. For pork, the tariff was reduced to 20 percent from 30 percent. The new import tax rate for corn used for animal feed is 2 percent, down from the previous rate of 5 percent. Offal duties were reduced from 15 percent to 10 percent. No end-date was given for lifting these “temporary” reductions, but USMEF believes it may indeed be difficult to raise them again.

USMEF involvement

On the beef front, USMEF has focused most of its efforts on educating Vietnam’s 10 or so beef importers on the range of U.S. beef cuts available. “It’s a very competitive import environment, so we need to educate end-users on the range of items available so that different players can explore different market niches,” says Sabrina Yin, USMEF’s newly appointed ASEAN director. On Feb. 19, 2008, USMEF held a major function in HCM involving nine of Vietnam’s U.S. beef importers and more than 150 members of HCM’s relatively new Saigon Professional Chef’s Guild. A similar event has been scheduled for chefs in Hanoiin the second half of the year.

On the pork front, USMEF conducted a program for nearly 40 chefs in Hanoi last fall. With the increasing number of expatriates from Japan and Korea, as well as a cooler climate, Hanoi is ideal for the consumption of hearty and hot dishes prepared with red meat. USMEF’s program helped the chefs get hands-on experience preparing popular Asian dishes like barbecue and hot pot or shabu shabu with U.S. pork. The program also contained an educational component so that chefs would be aware that U.S. pork is safer than domestic product, where hog diseases have plagued the local industry.

A month later, USMEF brought seven of the chefs from leading Vietnamese and Korean-style restaurants in Hanoi, along with the staff of a major U.S. pork importer, to an intensive culinary training in Singapore where they received training needed to successfully feature U.S. pork on their menus. Yin introduced U.S. pork pre-cooked bacon and sausage products along with Boston butt, tenderloin and riblets.

USMEF will host several Vietnamese importers this spring when foreign buyer teams converge in Las Vegas for the biennial USMEF Foreign Buyers Conference. One specific goal is to assist frequent Vietnamese purchasers of items such as short ribs in identifying potential alternative U.S. beef cuts, as prices of short ribs and other cuts that are popular in South Korea are expected to rise sharply following the return of U.S. beef into that country.

16 U.S. Agriculture Industry Leaders Study Mexico Export Market

U.S.Meat Export Federation Leads International Trade Mission

A group of 16 leaders from the U.S. grain, pork and beef industries last week visited meat processing plants, retail and food services outlets, as well as cold storage facilities and freight forwarders in Mexico, to gain a deeper understanding of how U.S. red meats are currently utilized and where there are growth opportunities for U.S. beef and pork products in Mexico.

“Mexico is a critical export market for both U.S. beef and pork, and has huge upside growth potential,” said U.S. Meat Export Federation President and CEO Philip M. Seng. “As a result, the export market to Mexico is equally important for U.S. corn and soybean growers who provide the feed to support our livestock.”

Mexico remains the leading destination for U.S. beef and beef variety meat exports, with exports totaling 792.4 million pounds during 2007. The United States supplies more than 80 percent of Mexico’s beef imports. According to U.S. Department of Agriculture projections, the beef market in Mexico is projected to grow a modest 2 percent in 2008, followed by a 15 percent jump in 2009, with imports expanding 91 percent over the next 10 years.

Mexico was the second largest destination for U.S. pork and pork variety meat exports in 2007, with exports totaling 609.3 million pounds. Again, the United States dominates Mexico’s pork imports with 87 percent to 90 percent market share, and the market is expected to grow 30 percent over the coming decade.

“USMEF is constantly analyzing where they’re spending money to make sure they’re getting the most bang for our buck,” said Tom Hotz of the Iowa Beef Industry Council. “It’s extremely important to do that analysis to ensure they’re promoting areas that can move more U.S. product – and make us more money. I see a lot of opportunities here [Mexico] for both ends of the spectrum: some high-quality product for the restaurants and some of our underutilized cuts that could be used at retail.”

The Iowa Beef Industry Council's Tom Hotz listens to a Gigante meat department manager

USMEF promotes U.S. beef and pork exports to Mexico through a variety of programs, including product promotions with Mexico’s leading supermarket and food service companies. In addition, it trains sales force personnel of processors, importers, distributors, and retailers of U.S. red meats in Mexico. It is implementing 56 seminars in Mexico in 2008 to better inform “influencers” (including physicians, nurses, dieticians and nutritionists) about the nutritional benefits of including red meat in a balanced, healthy diet.

USMEF also conducts seminars to better inform culinary students, chefs and distributors about the attributes of U.S. beef and pork to help build demand. It also is developing new commercial relations with potential customers in Mexico’s meat processing and meat boutique segments of the market.

“USMEF is allocating relatively more resources to Mexico’s supermarket, distribution and meat processing sectors, reflecting their importance to U.S. exports,” said Chad Russell, USMEF regional director for Mexico and the Dominican Republic. “In addition, USMEF is working with new customers, including regional supermarket chains, medium size processors and meat boutiques, to further build demand for U.S. red meats.”

The group of U.S. agri-business leaders who participated in the recent USMEF Market Expo in Mexico included:

Illinois Corn Marketing Board – Tim Seifert, Auburn, Ill., and Gary Schmalshof, Adair, Ill.
Iowa Beef Industry Council – Tom Hotz, Lone Tree, Iowa
Iowa Corn Growers Association – Jay Lynch, Humboldt, Iowa
Minnesota Soybean Research & Promotion Council – Bruce Schmoll, Claremont, Minn., and Scott Singlestad, Waseca, Minn.
Nebraska Beef Council – Mark Spurgin, Paxton, Neb.
Nebraska Cattlemen – Larry Smith, Ashland, Neb.
Nebraska Corn Board – Dave Merrell, St. Edward, Neb.
Nebraska Pork Producers – Russ Vering, Howells, Neb.
Nebraska Soybean Board – Greg Wortman, Creighton, Neb.
Certified Angus Beef – Ivette Farias, Wooster, Ohio
Hormel Foods Corporation – Feng Walkup, Austin, Minn.
Mirasco, Inc. – Eduardo Gonzales, Atlanta, Ga.