Iowa's Export Boom

A reputation for quality has helped Iowa position its beef in foreign markets.Walk into a supermarket in Japan and, if you're from Iowa, you may feel right at home. That's because it wouldn't be unusual to see a life-size display of Iowa Governor Terry Branstad next to a special section in the meatcase devoted to Iowa beef.It's the result of Iowa's 10-year effort to develop export markets for its

A reputation for quality has helped Iowa position its beef in foreign markets.

Walk into a supermarket in Japan and, if you're from Iowa, you may feel right at home. That's because it wouldn't be unusual to see a life-size display of Iowa Governor Terry Branstad next to a special section in the meatcase devoted to Iowa beef.

It's the result of Iowa's 10-year effort to develop export markets for its high quality, grain-fed beef. That effort has nearly 18% of U.S. exports to Japan coming from Iowa, according to Dale Braynard, manager of meat promotion for the Iowa Department of Economic Development (DED).

With Japan leading the list of importers of high-valued beef cuts, it's a strategy that has created demand and added value to Iowa beef.

"Iowa producers understand how important the export market is to them," says Braynard. A 1996 Cattle-Fax study found U.S. beef exports add $110/hd. to the value of fed cattle, $105/hd. to feeders and $99/hd. to calves.

And, it's a value-added effort that continues despite the loss of one of Iowa's major packing plants two years ago when the Des Moines-based Monfort plant closed. (See "Bringing A Packer Back," page 30.)

"We remain optimistic," says Mark Fischer of Iowa's future beef exports. Fischer is program director for the Iowa Beef Industry Council.

With beef export volume climbing 156% between 1986 and 1996 (from 377,000 metric tons to 967,000 metric tons), developing foreign markets represents continuing export opportunities for all U.S. beef.

As one of the first to establish itself in the export market, Iowa's beef industry leaders offer lessons for opening doors overseas.

Creating A Presence For Iowa, developing an overseas market meant being in the right place at the right time. When Japan began to phase out its government quotas on imported beef in the mid-1980s, Iowa took action.

With the quota system, imported beef had a shaky reputation, says Fischer. "Japanese consumers were getting grain-fed beef from the U.S. one time and grass-fed beef from Australia the next.

"The new system allowed the end users to make their own choices," says Fischer. Knowing that Iowa's highly marbled, grain-fed beef would appeal to the Japanese, trade missions were organized, including Iowa's governor, processors and beef producers.

"The Japanese are very quality conscious. So each time Iowa makes a visit in Japan, we talk about quality products from Iowa whether it be beef, pork or Amana refrigerators," Fischer says.

Fischer likens their efforts overseas to the current move toward the Brand-Like Initiative in the U.S. "We have been doing the Brand-Like Initiative with Japan for the past 10 years," he says.

"Products are very brand identified in Japan, so many of the grocery chains sell a specific brand - especially high-quality, grain-fed beef from the Midwest," says Fischer.

Early on, Japan's third largest grocery retailer, Seiyu, featured Iowa beef exclusively in its 250 stores. Seiyu even sponsored a taste test comparing Japanese domestic beef, Wagyu beef (a Japanese breed known for its heavily marbled meat), Australia grass-fed beef and Iowa grain-fed beef.

Iowa grain-fed beef won hands down, Fischer says. The taste test received media attention in Japan and made Iowa's beef even more popular with the Japanese, he adds.

The U.S. Meat Export Federation's (MEF) Phil Seng says, "It's not just a matter of country of origin, it's company of origin. Importers even like to know the producer."

Fischer and Seng say creating personal relationships will be critical to future export success.

For example, says Fischer, "The Koreans would like to trace beef to the actual producer. That's not possible in the volumes we deal with, but alliances could help trace some of that source they are looking for."

Such source verification will become especially important as food safety issues continue to surface.

"Food quality has evolved beyond marbling and taste into food safety, says Reg Clause, a past Iowa Cattlemen's Association (ICA) president and feedlot operator. Clause first traveled to Japan in 1990 and participated in a similar trade mission to Korea and China last October.

Clause believes alliances will play a key role in minimizing food safety issues. "We need to have integrated systems with full traceback capabilities to the producer level or we will not meet the global industry's standard for safety," he says.

Support from Iowa Governor Terry Branstad and his staff has has also been important to Iowa's success, says Fischer. "Governor Branstad has been willing to be a spokesperson for Iowa beef and pork in Japan. That sends a message that our relationship is important." Iowa's DED has also maintained theirown office in Japan since 1987.

But Fischer points out that while Iowa has taken some of the export initiative, they still work closely with MEF to identify customers, coordinate trips and provide on-site follow-up.

Researching The Future Iowa's export image is also bolstered by the presence of Iowa State University's (ISU) Meat Export Research Center (MERC), says Fischer.

"That facility has helped identify Iowa as a serious player in exports. It shows a willingness to put research dollars into addressing export issues," says Fischer.

For example, MERC researchers have found ways to minimize temperature variations during transport and increase beef's shelf life to 60 days.

MERC also pays attention to culture, as well as forecasts where new markets may be opening based on expanding economies. "Each country's cultural characteristics dictate differences in the meat cuts they'll want," says ISU's Dennis Olson, director for MERC. "With exports, we can cherry pick and sell parts."

While China's 1.2 billion people will attract increased attention from Iowa exporters, the heavy focus will still be on Japan because they like high-quality products, says Fischer. However, since the loss of a major in-state packer, Japan's Seiyu has had trouble finding enough Iowa product to meet their needs, and are no longer featuring an exclusively Iowa product.

"We are continuing to work with new suppliers, and look for other opportunities in Japan," says Fischer. "We also sell value-added processed meat products into Canada and Mexico, which is an equally important export market," Fischer adds.

It's those differences that Fischer says create room for all states to develop export markets. "All customers aren't looking for the same products, and we need to develop those niches. Whatever we do helps the U.S. beef industry as a whole," says Fischer.

In April 1996, when Iowa's Des Moines-based Monfort plant closed, it changed Iowa's beef industry. Left with only two in-state packing plant options, nearly 70% of Iowa's feeder cattle began to filter out of the state.

"Seventy percent of Iowa's cattle being processed outside the state means we are giving up potential profitability," says Joel Brinkmeyer, executive vice president of the Iowa Cattlemen's Association (ICA).

In January 1998, marketing options for Iowa producers became even more limited when IBP in Luverne, MN, closed. From January to October, Iowa cattle producers sent 53,000 head to this plant, ICA estimates.

For a state that formerly was the nation's number-one cattle feeding state, the ICA and state legislature realized something had to be done to attract a processing facility to Iowa.

"Our numbers indicate we're feeding more than 2 million cattle annually in Iowa," says Brinkmeyer. "Those numbers tell us we haven't lost the industry to the extreme."

ICA unveiled the Iowa Quality Beef Initiative last December. This program is designed to assist cattle producers gain more market access for the high-quality cattle that are raised and fed within the Iowa cattle region. The three components to this systems approach include:

* Added Value Beef Development Limited Liability Corporation - Established to aggressively create more market access for fed cattle, the corporation has been in contact with beef harvesting companies to invite them to establish a business relationship with Iowa cattle producers.

* Public Database Information Component - An ICA-ISU partnership was formed to establish a statewide database to quantify the genetic capability of Iowa fed cattle to meet consumer demand.

* Beef Business Development Component - This component was established to help producers meet the increasing business challenges of a capital intensive beef business.

Brinkmeyer says two key pieces of legislation were passed in Iowa's state legislature this year that support ICA's initiative.

The first is an Agri-Futures fund that can be used by producers or processor to expand value-added opportunities for any major agricultural commodity functions," says Brinkmeyer. For example it could be loans to beef produc ers to partner on a packing facility or for corn processors to start an ethanol plant, says Brinkmeyer.

Secondly, Iowa's legislature passed the first law of its kind in the nation making electronic ID a legal form of identification. "Electronic ID is now included in our brand law," says Brinkmeyer.

"Both of these legislative acts will help Iowa producers and be important to attracting a packer to Iowa," Brinkmeyer says. "We've also had contact with over 20 alliances to talk about how they can connect better with Iowa producers. Even without a packer these alliances help create marketing opportunities."

But ICA's ultimate goal continues to be including a packer in their system, and chances look good. "There are six different packers that we are talking to. Some are small, some are large. But we feel confident that somebody's going to locate here," says Brinkmeyer.

In a survey taken last fall by ICA, 30% of Iowa producers said they'd expand production if a new plant were built in Iowa or the upper Midwest. "That says a lot for what could be," says Brinkmeyer.