USMEF General Session

1. USMEF General Session U.S. Meat Export Federation

2. Asia Pacific RegionJoel HaggardSenior Vice President,Asia-Pacific

3. World Pork Import Markets (USDA Baseline Projections) United States Mexico Russia China East Asia Source : ERS, USDA

4. World Beef Import Markets (USDA Baseline Projections) North Africa & Middle East NAFTA Russia East Asia European Union European Union – 15 prior to 1999, EU-25 thereater. Excludes intra-EU trade. Source : ERS, USDA

5. Political Environment • Easing of North Korea tensions • Koizumi pushes reform agenda • China-Taiwan stable • SE Asia terrorism & unrest : Indo, RP, South Thailand • Pakistan – India thaw • Bird Flu

6. Key Asia Pacific Demographic Trends • Japan’s aging population • China’s growing urbanization and affluence • The North Korea question • Rising SE Asia populations

7. Asia Pacific Economic Situation • Sound economic fundamentals across the region • Renewed growth and confidence in Japan • China’s growth continues at torrid pace • Greater China : best performance in years – rise of Macau • Issues : currencies, energy prices and inflation; Philippines and Indonesia

8. Asia : GDP Performance

9. China : Major Issues • Widening gap between rich and poor seen as threat to future social stability • Widening trade surplus encourages trade actions and increased pressure to further re-value RMB; outside pressure for increased consumption • Foreign investor interest in China’s financial sector • Efforts grow to improve industrial and energy efficiency • Control over the media is tightening

10. Asia Pacific : Key Red Meat Tariffs

11. CHINA: Eligible Red Meat & Poultry Supplying Countries P=processing

12. Asia : Emerging Red Meat Competitors

13. Japan

14. Japan : General Market Situation - PORK • Total imports (Jan.- Aug.) flat, but US & Canada pick up share at expense of Denmark & other EU countries • US exports proceeding at record pace: frozen to chilled ratio high • Processing activity decreasing : domestic hog prices stay on the high side • Retail coops branding US pork in acknowledgement of US pork safety • Japan discusses variable levy and safeguards with its hog industry • China imports increasing rapidly

15. JAPAN : Market Priorities and/or Areas for Greatest Growth for U.S. Pork U.S. Pork Export Forecast Metric Tons (1,000’s) • Further expansion of chilled pork at retail sector, including regional chains • Expand US chilled pork usage in foodservice, in particular among Tonkatsu/Family style restaurants—capture share from domestic suppliers. • Capitalize on the trend of Japanese “Customer brand” for quality and safety • Image-up US pork quality to consumers

16. Japan – General Market Situation - Beef • Market remains undersupplied but imports up 15% for 1st 2/3 of 2005 • Beef variety meat market remains severely under-supplied • Domestic prices remain high, dampening demand, but some stability returning : stocks at post-BSE high • Competitors : Australia, New Zealand; China shipping > 20 FCLs of cooked beef per month • Trade preparing in earnest for end of year market re-opening • Resumption to pre-BSE levels = US $1 billion GDP gain.

17. Japan : Wholesale Beef Prices 2003-2005 (Yen/kg.)

18. Market Priorities and/or Areas for Greatest Growth for U.S. Beef U.S. Beef Export Forecast Metric Tons (1,000’s) • Work with key promoters to set the basis for business expansion • Promotional activities will be closely linked with the expansion in supply • Continuous approach with Japanese trade to gradually restore US beef image among consumers

19. Korea

20. Pork: General Market Situation • Total Korean pork imports are increasing : 2005 will see record import numbers • US pork exports in 2005 have increased by 293% from last year. • US chilled pork exports in 2005 have increased by 265% from last year. • US Boston butts have filled the gap of US short rib supply in Korean BBQ restaurants. • 5 leading retail chains started selling US chilled pork. • Chile has shown solid growth as a competitor.

21. Market Priorities and/or Areas for Greatest Growth for U.S. Pork • Korea prefers certain cuts such as SRB and Collar Butt. This growing demand can be filled by US chilled pork. • US chilled pork is a substitute for domestic chilled pork in restaurants. • Leverage new COO ID in Restaurants

22. Beef: General Market Situation • Market closed since December 26, 2003 • There are still US beef stocks in the market being sold at extremely high prices. • Short supply of beef resulted in decrease in PCC of beef from 8.1Kg in 2003 to 6.8Kg in 2004. • MLA is doing aggressive beef promotion to strengthen the image of clean and safe beef. • Likely re-opening timeframe: 1st quarter 2006

23. Market Priorities and/or Areas for Greatest Growth for U.S. Beef U.S. Beef Export Forecast Metric Tons • Traders will immediately react to the market reopening announcement. • US beef is a core food ingredient for Korean BBQ restaurants. • Retailers have high confidence in US beef and are ready to order US beef once the market reopens. • Consumers are seeking value at low price, which will help drive sales.

24. China / Hong Kong

25. China : General Market Situation Pork • Pork : - China production expanding in response to strong price signals in 2004. - Streptococcus suis outbreak leads to new focus on illegal slaughter. - Processed meat production continues double digit expansion. - Direct shipments to China by eligible supplying countries – including US – increasing. - Hong Kong to set up new Food Safety Department to increase disease preparedness and coordination

26. China : Market Priorities and/or Areas for Greatest Growth for U.S. Pork - Local owners/operators of western restaurants - Ethnic : Japanese/Korean BBQ & Hot Pot - Prime Areas : South China, NE China, Hong Kong - Processed Meats : Hong Kong mass retailers and wet markets - Requires sustained grass roots account-by-account development; focus on chefs

27. China : General Market Situation Beef - China remains under-supplied especially for slicing items. - Large volumes & range of Canadian and US beef items are available throughout China. - Australian promotion efforts have some success in top hotels, but mass market is elusive - New suppliers/items : Uruguay, Argentine Angus - Hong Kong : Brazilian and Canadian beef keep total supplies steady. - Hong Kong : Canadian beef promotions are aggressive and well-funded

28. China :Market Priorities and Areas for Greatest Growth for U.S. Beef • Local owners/operators of western restaurants & Hotel • Ethnic : Japanese/Korean BBQ & Hot Pot • Retail – slicing meats • Geographic Coverage – all urban areas present opportunities : focus on chefs • Hong Kong : no safety image constraints but grain-fed Canadian supplies ample • Macau : casino-related foodservice

29. Taiwan

30. Taiwan: General Market Situation PORK • In 2004, Taiwan was the 5th largest importer of U.S. pork, consuming more than 38,258 mt of U.S. pork and pork V-meats. • In 2005, pork consumption and importation has declined due to: • revelations of illegal slaughter and processing of sick and dead hogs in the Spring 2005. • increasing domestic hog numbers. • Domestic processed pork market is strong. • Major competitor is Canada: the supplier is viewed as having lower prices, better specifications and better service. Source: Taiwan Customs Data

31. Market Priorities and/or Areas for Greatest Growth for U.S. Pork • Encouraging export of processed pork products to Taiwan. • Encourage participation of smaller-scale US packers to export to Taiwan to capture niche demands. • Joint promotion with high-end hotels and restaurants to expand U.S. high quality pork image.

32. Taiwan :General Market Situation Beef • Taiwan’s beef import market was open to US boneless beef from April 16, 2005 to June 24, 2005. • Imports reached an estimated 7,000+ tons, with importers stocking up on popular items such as boneless short ribs. • Frozen stocks of some items will last until the end of the year or into the spring of ’06. • More hostile politics will complicate the process to re-open the market the second time, although the procedure is still unclear. • Australia and New Zealand currently dominating Canada will be a potential competitor after it re-establishes access. Allowing in both US and Canadian beef may be viewed as politically palatable.

33. Market Priorities and/or Areas for Greatest Growth for U.S. Beef • Rebuild consumer confidence in US beef safety. • Develop demand for new underutilized US beef cuts • Maintain strategy of aggressive chilled beef promotions at retail • Image-up U.S beef at foodservice & work closely with steakhouse chains • More safety emphasis required upon 2nd market re-opening

34. ASEAN

35. General Market Situation - Pork • Most regional pork imports driven by price considerations • Total regional pork imports modest; duty reductions would boost trade • South American suppliers taking share from EU & Australia • Market watch list: RP PVM & Thailand-USA post FTA import duties

36. ASEAN: Market Priorities and/or Areas for Greatest Growth for U.S. Pork • Increase presence of U S pork at retail (in Singapore) by promoting high quality Kurobuta pork and processed pork lines. • Introduce U S enhanced pork, after the success of pre-cooked bacon. • Introduce U S shoulder cuts (picnics & butts) to Chinese restaurants for preparation of “Char Siew” pork. • Work with pork processors in Singapore, Philippines and others to boost manufacturing usage of US pork. • Australian/NZ: build up relationship with trade

37. ASEAN : General Market Situation Beef • Total 2005 beef imports increasing in Indonesia & Malaysia, declining slightly in the Philippines & Singapore • U.S. beef has access to Vietnam and the Philippines but imports are modest due to limited import infrastructure & weak currencies • Oct ’05 ; Thailand, Singapore & Malaysia begin movement on US beef issue • The region remains a commodity beef importer, but high end opportunities are growing • U.S. Beef Watchlist : Thailand

38. Market Priorities and/or Areas for Greatest Growth for U.S. Beef • Currently only Philippines and Vietnam remain open. Indonesia has re-closed market after the 2nd case of BSE. • Good market for loin cuts and potential for non-loin cuts in Philippines as the market is very “westernized” and consumers love meat. • Vietnam has growing potential as a tourist destination with much development of 5-star hotels. • Strong economic growth resulted in increasing affluence in the young population for western food that include steak, particularly grilled non-loin beef cuts.

39. Australia : Pork Trade (mt) Volume Year