“The European Union in the Global Meat Complex”

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

2. Global Trends

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

4. What is the Market Potential?

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

6. The EU’s Role

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

8. 2005 Key Importers Source: USDA

9. 2005 Key Exporters Source: USDA

10. 2005 EU Meat Balance of Trade Source: USDA

11. Current EU Red Meat Situation

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

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

14. EU-25 Total Hogs: 152.3 million (2004) PCC – Pork: 44 kg Self-sufficiency: 106% (’05 est) Source: USDA, FAO

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

16. 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 (170-190k mt in 2006) • Availability of commercially-priced beef from outside the EU, particularly South America • BSE decreased production and consumption in the ’80’s and ’90’s • Accession of new member states will not materially alter the dynamics

17. 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

18. Source: USDA

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

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

21. Trade Implications

22. 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

23. Number of New SPS Issues Raised Each Year Source: WTO

24. Specific Trade Concerns by Product Source: WTO, 2000-2001 measures

25. 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

26. 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

27. Trade Concerns Reported Solved After 10 Years Source: WTO

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

29. Thank You For more information: USMEF - Denver (303)623-6328 Or visit USMEF at www.usmef.org