Soybean Execs Pleased with Pork Stimulus Results

Soybean producers recently underwrote an aggressive USMEF initiative to
bolster U.S. pork exports in an effort to help improve the economic outlook
for one of its most valuable customers, the U.S. pork industry.

With pork supplies mounting in cold storage facilities and hog prices stuck below break-even levels, soybean producers from Minnesota, Nebraska and South Dakota, as well as the United Soybean Board, stepped up to the plate last fall with an additional $1.35 million in checkoff funding to support USMEF’s pork marketing programs in the key international markets of Japan, Mexico and South Korea.

The Minnesota Soybean Research and Promotion Council (MSR&PC) got the ball rolling by investing an additional $800,000 toward USMEF promotions in Japan and Mexico at the end of 2009 and the first quarter of 2010. The Nebraska Soybean Board soon stepped forward with a commitment of $200,000 toward the same Japan/Mexico effort. The “Pork Stimulus Package” gained further momentum when the United Soybean Board (USB) invested $250,000 in pork marketing programs in South Korea and the South Dakota Soybean Research and Promotion Council made an additional investment of $100,000.

While the results of this “Pork Stimulus Package” will not be known for
several months, the three markets targeted present a great opportunity for
U.S. pork. Mexico and Japan are the top two markets both in terms of volume and value for U.S. pork while South Korea is sixth, but offers considerable potential for growth. Even though pork exports were affected globally by the economic downturn and concerns related to the H1N1 virus, U.S. exports to Japan are on pace to match the all-time single-market value record (set in 2008) of $1.54 billion and exports to Mexico have already set a new yearly volume record and should easily surpass this market’s previous value record of $692 million (also set in 2008).

According to MSR&PC Executive Director Jim Palmer, the stimulus plan gave Minnesota soybean producers an opportunity to address the increasingly difficult economic climate that was being faced by the U.S. pork industry.

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MSR&PC Executive Director Jim Palmer

“Some of our council members felt that we need to do more to respond to one of our most critical demand concerns, which is the health of our nation’s
livestock industry,” Palmer said. “Our leadership identified pork exports as
a key factor in our industry’s success. So we turned to USMEF and challenged them to present us with an emergency proposal that would make an immediate impact – and they met that challenge exceptionally well. I commend USMEF for quickly developing a project that generated such a rapid and effective response to this situation.”

Palmer explained that while the additional funding represents a very bold
step for an organization of MSP&RC’s size and scope, its leadership views
the decision as an extremely positive and worthwhile investment.

“We were initially prepared to invest a half million dollars, but given the
challenge and the quality of the proposal USMEF presented, we were able to
transfer some funding around and increase that amount to $800,000,” he said.

“This is a very substantial percentage of our organization’s international
marketing investment. But knowing that more funding would still be needed,
we reached out to the national program and to our peer organizations for
additional funding and we were very impressed and appreciative of what USB, Nebraska and South Dakota were able to produce.”

One of the key marketing initiatives funded by the additional soybean
industry support is the introduction of U.S. pork back ribs in Japan. The
product drew immediate interest from key Japanese buyers and major national retailers. USMEF took an innovative approach to the rollout, working with cooking instructors and chefs to develop recipes that worked in Japanese kitchens and fit with local cuisine. At the foodservice level, USMEF conducted a baby back rib promotion with Guru Navi (Gourmet Navigator), Japan’s most well-known restaurant Web site, which draws more than 850 million visitors per month. Many of the restaurants participating in this promotion decided to add pork back ribs to their permanent menus.

The introduction of pork back ribs in Japan has been an unqualified success,
with more than 1,500 of the country’s retail outlets now selling back ribs.
When year-end results are tabulated, the USMEF staff in Tokyo expects to
have sold about 220,000 pounds of back ribs during December holiday
promotions alone and about 660,000pounds in the fourth quarter of the year.

In Mexico, USMEF has intensified its retail promotions of U.S. pork,
rebuilding consumer confidence temporarily shaken by the country’s severe
H1N1 influenza outbreak in the spring of 2009. These efforts include
innovative marketing strategies that target regular pork consumers with
recipes, cooking instructions and information about the quality and safety
of U.S. pork.

While exports to South Korea are still below their 2008 pace, they have
recovered nicely in recent weeks. Fueled by a USMEF advertising campaign
<> aimed at establishing U.S. pork as a year-round entrée and other successful fine dining <> and quick service restaurant <> promotions,
November pork exports to Korea reached their highest level since April at
$20.35 million. This was 25 percent above the October total and more than 80 percent above the monthly values achieved in September and August.

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United Soybean Board CEO John Becherer

“As the United Soybean Board looked for funding opportunities that would
deliver a strong return on investment, the additional pork marketing efforts
in Korea really stood out,” said USB Chief Executive Officer John Becherer.
“For the soybean producers that establish our funding priorities, it all
comes down to getting a strong return on their investment by increasing
demand for our product. Stimulating pork exports to Korea certainly fulfills
that objective.

“USB has had a long and very productive relationship with USMEF,” Becherer continued. “Since 2001, we have made it a priority to fund overseas marketing programs for pork as we see this as an excellent way to increase utilization of soybeans here in the United States.”

The purchasing power of the $1.35 million soybean industry investment will
actually approach $4 million because USMEF is able to use these funds to
leverage support from the Market Access Program, the Foreign Market
Development program, third-party contributions and other non-checkoff funds. Earlier this month, the success of this cooperative effort led MSR&PC to honor USMEF with its Industry of the Year Award. This award is presented to an industry or individual the MSR&PC chairman identifies as having provided an exceptional benefit or service to Minnesota’s soybean farmers over the past year.

“USMEF has been a strong partner of the Minnesota soybean industry for many years now, but I would say that this past year was truly exceptional,”
Palmer said. “So without hesitation, MSR&PC saw the Industry of the Year
Award as a great way to recognize USMEF for developing and executing these additional pork promotions in a very fast turnaround time, and doing so with such positive results.”

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