Opening General Session

1. Opening General Session U.S. Meat Export Federation May 25, 2005

2. Alan Smith Chairman

3. Sponsors • American Berkshire Association • American Farm Bureau Federation • Cargill Meat Solutions • Certified Angus Beef Program • Elanco Animal Health • Farmland Foods • Food Safety Net Services • Hormel Foods International • IMI Global • Interra International

4. Sponsors • Jones Dairy Farm • Monsanto • Nebraska Corn Board • Obernagel Farms • Phibro Animal Health • Pioneer • Seaboard Farms • Swift & Co • Smithfield Inc. • Tyson Foods • Vectra Bank, Colorado

5. Alan Smith Chairman

6. International Markets Overview USMEF Board Of Directors Meeting Opening General Session Washington, DC May 25, 2005

7. Jackie Hruby Director – Europe, Russia & Middle East Europe EU Eastern Europe Russia Russian Federation Confederation of Independent States Middle East Europe, Russia & Middle East Region

8. U.S. Beef In Europe, Russia and the Middle East Note: 1) In an effort to represent normal market conditions, all stats provided are based on 2003 annual totals. 2) Source: USDA

9. U.S. Pork In Europe, Russia and Middle East *Source: USDA, 2004 annual totals.

10. Overview • Europe • High per capita incomes across the EU. • Continued expansion of the EU. • EU will comprise 27 member states with the entry of Bulgaria and Romania in 2007. • Russia • Increasing per capita incomes in line with continued economic growth, currently at 5%. • CIS markets relatively underdeveloped and less stable.

11. Overview • Middle East • High levels of economic growth. • Increasing number of Free Trade Agreements in place or being negotiated with the US. • Jordan • Morocco • Bahrain • UAE (by end 2005) • Discussions underway with Oman, Kuwait and Qatar • Continued instability in the region.

12. Challenges / OpportunitiesEurope • Growing beef deficit forecast through 2010. • World’s most affluent trading block, currently comprising 455 million consumers. • Continued increase in EU membership. • Access restricted for US beef and US pork. • Increasing competition from third country suppliers such as Brazil and Argentina. • Continued influence of the EU on global policy.

13. Challenges / OpportunitiesRussia • High levels of economic growth. • Declining domestic production, particularly beef. • Favorable TRQ allocations for US pork and US beef. • Restricted access for US pork to the rapidly developing HRI and Retail sectors. • Increasing competition as Brazil seeks access to the Retail and HRI sectors. • Continued ban on US beef.

14. Challenges / OpportunitiesMiddle East • High rates of economic growth. • Low levels of self-sufficiency. • Growing HRI and Retail sectors. • A number of markets beginning to reopen post BSE: • Egypt • Oman • Kuwait

15. Tom Lipetzky Vice President, Int’l Programs Caribbean Liz Wunderlich Central & South America Ricardo Vernazza Mexico/DR/Cuba Gilberto Lozano Western Hemisphere Region

16. U.S. Beef In The Western Hemisphere Note: 1) In an effort to represent normal market conditions, all stats provided are based on 2003 annual totals. 2) Source: USDA

17. U.S. Pork In The Western Hemisphere *Source: USDA, 2004 annual totals.

18. Economic & Political View • Generally moderate economic growth. • Peso to dollar exchange steady at ~11:1 and low inflation giving rise to consumerism in Mexico. • Retail expansion to lesser populated cities. • 60 percent of population is under 20 years old. • Caribbean tourism rebounding post-hurricane. • Exports fueling growth in Southern Cone. • Tourism growth in Costa Rica & Guatemala. • Stable political environment. • Mexico will have election in ’06. An emerging contender is current mayor of Mexico City Lopez-Obrador – a win by leftist PRD could slow push for increased trade.

19. The Trade Environment • Proliferation of FTA’s as countries see trade as a means to fuel economic growth. • Beneficial to U.S. red meat trade: • NAFTA • CAFTA-DR • Andean Free Trade Agreement • Chile FTA • Increasing competition for U.S. exports: • MX-Japan FTA creates opportunity for Mexico to ship as much as 80,000 MT of pork to Japan by 2009. • Canada-Costa Rica agreement currently gives Canadian pork an ~20 percent price advantage. • MX-Korea FTA is in the works.

20. Not Just Export Markets But Competitors Too! • Mexico shipped $2.2 million of beef to Korea in ’04, expected to ship $9 million in ’05. • Brazil is becoming a major player. Beef to Russia, Chile, Egypt, and Hong Kong; Pork to Russia. • Argentina shipping increasing volumes of beef to Russia, Chile, and China. • Chile exporting pork to Korea, Japan, and Mexico.

21. Market Access • Red Meat • High tariffs. • Import permits in DR are problematic and require 3 agencies. • PA and CR require individual plant approvals. • February “cash in advance” policy for Cuba trade is detrimental to U.S. red meat exports.

22. Market Access – Beef & Pork • Beef • ABC, Colombia, and Peru remain closed to U.S. beef. • Mexico sunset review of dumping duties. • Strict compliance by Mexico inspectors has led to shipments being rejected and plants delisted. • Pork • Mexico ham dumping investigation. • Jamaican ban on pork imports for concern of psuedo-rabies is unwarranted in the case of the U.S. • Panama’s issuance of import permits is discretionary and costly.

23. Promotions • Activity ranges from analysis of competitors in South America to a multi-country chefs competition covering the Caribbean and Mexico, to integrated retail-consumer programs in Mexico. • Also, multi-organization effort to promote deli sales in Caribbean and Central America.

24. Challenges & Opportunities • Mexico continues to be the region’s greatest current and future opportunity but also presents constant challenges in terms of border issues. • Pork generally being thought of as wholesome and nutritious – replacing concerns about trichinosis and unclean image. • U.S. beef has a positive image – taste, tenderness and consistency of product attributes will be key in differentiating from less expensive domestic product. • FTA’s and improved access central to long-term success.

25. Joel Haggard Vice President, Asia Pacific Japan Korea Taiwan Hong Kong & China ASEAN Australia Asia Pacific Region

26. U.S. Beef In Asia Pacific Note: 1) In an effort to represent normal market conditions, all stats provided are based on 2003 annual totals. 2) Source: USDA

27. U.S. Pork In Asia Pacific *Source: USDA, 2004 annual totals.

28. Asia - Mega Issues • North Korea • Japan’s Relations with China & Korea • China • Taiwan Relations • Yuan Revaluation • Economic Performance • Trade Relations • India • Regional Trade “Fever”

29. Asia: Trade Fever Recent FTA/RTA Activity • Japan & India (Joint Study Group initiated 4/29) • China & Indonesia (signed 4/26) • Singapore, Chile, New Zealand & Brunei (5th round completed 4/23) • China & Australia (talks initiated 4/19) • Thailand & New Zealand (signed 4/19) • South Korean & Singapore (signed 4/16) • China & Pakistan (4/16) • Japan & ASEAN (talks initiated 4/13) • China & India (feasibility study signed 4/11)

30. East Asia Beef Imports: Supplier Market Shares (2003) Total 2003 Imports = 1,522 tmt * Source: World Trade Atlas; includes China exports to HK; includes beef & beef variety meats

31. East Asia Beef Imports: Supplier Market Shares (2004) Total 2004 Imports = 1,190 tmt * Source: World Trade Atlas; includes China exports to HK; includes beef & beef variety meats

32. Estimated One-Year Trade Costs of Recent Disease Related Market Closures • EU BSE: Long Term Costs € 92 billion* * Source: European Association of Animal Production estimate

33. East Asia Pork Imports: Supplier Market Shares (2003) Total Imports = 1,513.7 tmt* *Product weight

34. East Asia Pork Imports: Supplier Market Shares (2004) Total Imports = 1,726.7 tmt* *Product weight

35. Asia PacificAccomplishments: 11/04 – 5/05 • Taiwan beef market re-opening & re-launch • Vietnam beef market re-opening & re-launch • Japan & Korea multi-sector pork programs • China: U.S. high quality pork penetration • Australia: Pork market opening & sales

36. The BSE Issue in Asia Critical Questions • Japan – Short-term: Duration of FSC Deliberations • Japan – Long-term: 30 months & over eligibility • Korea – Short-term: initial import conditions; 20 vs 30 month; bone-in vs boneless • Korea – Long-term: Elevating quality image of U.S. beef • HK/China – Short-term: Satisfying traceability concerns • HK/China – Long-term: Negotiating China eligibility

37. Image of Beef among Japanese Consumers Expensive, tasty, marbled Expensive but appealing because of the delicious taste; though there were BSE cases, it is safe Domestic beef Q u a l i t y Worried about BSE U.S. Imports are banned = They must be dangerous Aussie beef Americanbeef Imported beef Safe and reassuring; but not tasty Lean, cheap, not tasty Safety Low;worrying High; safe

38. Questions ? For more information: U.S. Meat Export Federation 1050 17th Street, #2200 Denver, CO 80235 (303)623-6328 Or visit USMEF at www.usmef.org