Global Industry Perspective Greg Tyler, Vice President of Marketing USA Poultry & Egg Export Council

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1 Global Industry Perspective Greg Tyler, Vice President of Marketing USA Poultry & Egg Export Council UNECE Meetings Atlanta, Georgia April 24 th, 2012

2 USAPEEC & its Mission The USA Poultry & Egg Export Council (USAPEEC) is a non-profit trade association whose members account for more than 95% of all U.S. poultry and egg exports. USAPEEC exists for the purpose of increasing U.S. poultry & egg exports by protecting, opening and developing markets throughout the world and by serving as the industry s voice on trade policy issues.

3 USAPEEC s Global Network

4 USAPEEC Locations Based in Stone Mountain, Georgia, USAPEEC has 14 international offices in major export markets: Mexico City Monterrey Hong Kong Singapore Moscow Beijing Central Asia Shanghai Tokyo Seoul Middle East South Africa Europe Latin America/Caribbean

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6 It s tough making poultry sexy. But we do our best!!!

7 BAHRAIN KOREA JAPAN PANAMA THAILAND

8 KOREA MEXICO PHILIPPINES MALDIVES KAZAKHSTAN

9 JAPAN MEXICO HONG KONG JORDAN

10 VIETNAM SINGAPORE RUSSIA YEMEN YEMEN

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13 WORLD DEMAND FOR BROILER MEAT Billion World population (left axis) (e) Per capita consumption (right axis) kilogram Global demand for broiler meat has continued to rise as both population and per capita consumption increase. Source: USDA and U.S. Census Bureau

14 Top Poultry Producers in the World 40% 35% 30% 25% 22.4% % 20% 15% 15.6% 15.3% 13.2% 10% 5% 0% United States 3.4% Brazil China EU-27 Mexico ROW Source: USDA/FAS

15 Top Chicken Exporters in the World (In 1,000 metric tons) 4,000 3,500 3,750 3, , ,500 2,000 1,500 1, , ,421 0 Brazil USA EU27 Thailand China Argentina Canada Chile ROW Source: Global Trade Atlas

16 Top Poultry Consumers in the World (2011) USA China Brazil million tons EU-27 Mexico Russia India Japan Iran 4.0 South Africa 2.0 Argentina 0.0 Saudi Arabia Source: USDA/FAS

17 Per Capita Broiler Consumption Varies Significantly across the Countries (2010) Brazil USA Argentina 40 South Africa Mexico Kilograms Iran Russia EU-27 Japan China Indonesia 0 India Source: USDA/FAS

18 2011 Broiler Exports to Set Record in Value Quantity (left axis, million tons) Value (right axis, billion US$) $4.5 $4.0 $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $ (e) An average annual increase of 9.8% in volume and 9.6% in value during Source: USDA/FAS

19 Share of U.S. Broiler Production Exported 30% 25% 20% 15% 21.7% 21.0% 19.8% 10% 5% 0% 3.1% 6.0% (e) Source: USDA/FAS

20 Top U.S. Broiler Export Markets ROW 36.1% Russia 20.5% ROW 52.6% Hong Kong 16.4% Cuba 4.1% = Mexico 13.2% Iraq 4.5% Hong Kong 4.6% 2009 Mexico 10.4% China 19.9% Iraq 4.0% Canada 4.0% 2011 Angola 4.7% Russia 5.1% Broiler exports in 2011 are expected to set record in value this year, despite the major losses in China and Russia.

21 Top Turkey Exporters in the World 1,000 MT USA Brazil EU-27 Canada Chile ROW Source: Global Trade Atlas

22 2011 Turkey Exports Set Record Quantity (left axis) Value (right axis) $481 $600 $700 $600 $500 1,000 MT $400 $300 $200 million US$ 100 $100 0 $ An average annual growth of 4.2% in volume and 9.3% in value in Source: USDA/FAS

23 Share of Turkey Production Exported 15% 12% 11.8% 11.0% 9% 9.6% 10.6% 6% 3% 0% 0.9% 1.6% (e) Source: USDA/FAS

24 Top U.S. Turkey Export Markets (In 1,000 metric tons) Mexico China Hong Kong Canada Dominican Republic ROW 66.0 Source: USDA/FAS

25 Egg Exports To Set New Record in Value Quantity (left axis) Value (right axis) (e) million dozen million U.S. dollars Note: include table eggs and egg products in shell egg equivalent Source: USDA/FAS

26 Share of Table Egg Production Exported 5.0% 4.0% 3.0% 2.0% 3.1% 3.0% 1.0% 0.0% Source: USDA

27 Top Table Egg Export Markets (share of export volume) 60% 50% 40% 30% 20% 10% 0% % Jan - Sep % 18.0% 12.7% 1.7% 1.6% Hong Kong Canada UAE Bahamas Israel ROW Source: USDA/FAS

28 Top Egg Product Export Markets (share of export value) 60% 50% 52.9% % % 20% 18.6% 2010 Jan - Sep % 10% 0% 6.0% 1.7% Japan EU-27 Canada Mexico South Korea 4.1% ROW Source: USDA/FAS

29 U.S. Poultry & Egg Export Value (In million U.S. dollars) $6,000 $5,000 $4,000 T able egg & egg products Other poultry Turkey Value Broiler Value $3,000 $2, (e) $1, $0 Total export value in 2011 is expected to reach 5.2 billion, up 19% from last year Source: USDA/FAS

30 World Broiler Net Exports in the Next Decade million tons Net exports is expected to increase at an average rate of 3.0 percent throughout Source: FAPRI

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32 Challenge of High Feed Grain Prices The prolonged economic downturn is a challenge for the world poultry industry because it has led to higher unemployment, lower consumer income, and lower consumption, which translates into a weak market demand for meat protein. Our biggest challenge remains high feed grain prices. But, as the most efficient converter of feed to meat, the impact on poultry is less than other meats. Record corn and soybean prices, combined with depressed sales, have put nearly every U.S. poultry company in an unprofitable situation. The global situation is similar.

33 Animal diseases such as AI impact trade While earlier AI consumer scares have subsided, incidents of HPAI is on the rise. U.S. and Brazil remain free of HPAI. In Asia and Africa, the prevalence of backyard flocks and the inability of governments to implement appropriate control measures could spell a major production disaster. Even though OIE says trade should not be restricted on basis of LPAI.many countries still do

34 Religious and Cultural Barriers This sort of barriers to entry are often encountered in predominately-muslim countries. For example, entry to Malaysia and Indonesia, and Saudi Arabia must meet the halal regulations, meaning animals should be raised, slaughtered and processed in accordance with Muslim rites. But definitions, interpretations, and regulations of halal vary widely from country to country in both print and practice. The ambiguous regulations combined with costinefficient in halal production have dissuaded U.S. poultry processors from selling products to those markets.

35 Importance of Trade Descriptions to the Industry The trade standard creates better communication between buyer and seller as to product and packaging specifications for raw poultry products. The trade descriptions provide concise word and picture descriptions of product composition and define a coding system to precisely specify product and packaging characteristics. This will help to greatly reduce disputes between interested parties.

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37 Possible Problem Areas and Miscues. Pack Style: The arrangement of product in a package or shipping container Bulk Pack Layer Pack Regular Layer Pack Honeycomb Soldier pack Flat pack

38 Possible Problem Areas and Miscues. Slaughter System Traditional Kosher Halal Other

39 Possible Problem Areas and Miscues. Production and Feeding Systems (Prod/Feed) Traditional Production and Diet Free-Range Production with Traditional Diet Pastured/Pasture-Raised Production with Traditional Diet Traditional Production with Organic and/or Antibiotic-Free Systems Free-Range Production with Organic and/or Antibiotic-Free Systems Pastured Production with Organic and/or Antibiotic-Free Systems Other

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41 Conclusions The prolonged economic downturn leads to weak market demand. High feed and energy cost, combined with depressed sales, have put many poultry companys in an unprofitable situation. Animal diseases such as AI impact trade. Religious barriers are often encountered in predominately-muslim countries. For example, entry to Malaysia, Indonesia, and Saudi Arabia must meet the halal regulations. Trade barriers in major export markets:

42 Conclusions Despite many trade obstacles we are facing, we are still making progress on expanding export markets and our exports are continuing to grow. Biggest challenges are maintaining disease free status and persistent high feed and energy cost. In the long run, more people will eat more poultry meat as poultry efficiency in energy and feed conversion prevails. To feed the world s ever-growing population, we must Do a better job delivering our positive message to consumers and government. Support trade based on sound science, not political science.

43 Greg D. Tyler Vice President of Marketing USA Poultry & Egg Export Council