Meat+Poultry - December 2016 - 53

B

ecause of the large populations and
huge potential of the Asian Rim and
China, trade with those regions often
dominates the discussion. But trade with South
America warrants some attention. Afterall,
trade with that area of the world continues
to grow, is easier for the US to manage and is
certainly closer to home.
One example illustrates why trade
maximizes the value of US production and fills
gaps when the market demands something.
What does the poultry industry do during
football season when they need chickens with
six wings instead of two? The industry can
bolster the supply of chickens and turkeys
needed during football and the fall holiday
season through its free trade agreement (FTA)
with Chile. In turn, the other parts of the
chicken will be sold to Chile at competitive
prices. Overall, the FTA with Chile has resulted
in cross trade that has worked out well,
according to Jim Sumner, president of the USA
Poultry and Egg Export Council.
The FTA with Colombia has shown some
of the same trends, with an arrangement
benefitting both Sumner's members and the
domestic poultry industry association. They
have worked out a system wherein quarterly
auctions of portions of the import quota
determine the incoming quantity. US exporters
bid on the quota and Colombian agents handle
things on the other end. This year, all of the
quota was used, Sumner said. The associations
run the system and it generates some income
for them.
While there is an FTA with Peru, there is
not a lot of trade, Sumner said. Peru has a
domestic poultry industry and the exchange
rate has not been favorable to increasing
trade. The quota there is based on a first-come,
first-served basis, and that doesn't work as
well. Exporters don't know for sure ahead of
time if a quota will have room and longer-term
planning is harder to do.
As for outlook, Sumner said cheaper
feed costs will help keep US production
more profitable, but feed costs are just not
a major factor in exporting. He sees steady
growth in the South American market, but no
potentially tremendous movement. There are
several factors influencing that outlook. The
Colombian economy is very dependent on the
price of oil, which while recovered from its

US Beef & Variety Meat Exports and Forecasts(f) to South America (metric tons)
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
2010 2011 2012 2013 2014 2015 2016f 2017f 2018f 2019f 2020f
US Meat Export Federation

lows, is down from the levels of recent years.
There is little trade with Brazil; rather,
Brazil is America's biggest competitor. But the
feed supply is short in Brazil at the moment
and prices are very high, significantly affecting
domestic production. That will make it harder
for Brazil to compete with US exporters on the
global market.
Lastly, there is not much trade with
Argentina, as it is growing its own poultry
industry.

DIVERSIFIED BEEF MARKETS
Jessica Julca, US Meat Export Federation's
(USMEF) South American manager, based
in Peru, paints a varied picture of diversified
markets, depending on the location one is
considering within in that region. Her office
was opened in 2011 and it was challenging at
first, as there was not much familiarity with
US beef and pork. With beef it was somewhat
easier, as consumers in Peru, Chile and
Colombia were used to seeing beef imported
from Uruguay, Paraguay and Brazil. But there
is a big difference between those products and
US beef in quality and price.
To have the most impact quickly,
the strategy was to reach importers and
distributors for foodservice and retail stores.
Training and promotion programs were
instituted to get them familiar with US beef.
Once key customers started having good
results, the word spread.
Julca is based in Lima and began her
efforts there because Peru is the gastronomic
capital of South America. She started with
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