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AR #1516-FM

AUTHORIZATION REQUEST FOR FY 2015

CBB Budget Category: Foreign marketingName of Contractor: National Cattlemen’s Beef AssociationName of Organizations Subcontracting: USMEF

I. OVERVIEW

A. AR Description: In support of the Beef Industry Long Range Plan, USMEF organizes its programs in the international markets around the following strategic priorities:

Market Access – Minimize the impact of government requirements and emerging consumer issues on U.S. beef exports. USMEF staff around the world dedicate a significant portion of time managing issues that limit U.S. beef exports. To maximize the impact of market access initiatives, USMEF sets its priorities so that available resources are dedicated to issues that are likely to have the greatest impact on exports and which USMEF is in the strongest position to influence.

Market Development – Introduce U.S. beef to new buyers in untapped sectors in each market while expanding the volume and range of cuts purchased by current buyers. USMEF addresses this priority through all of its marketing and development programs in each of the international markets. USMEF staff identify areas with the highest potential for growth and establish unique strategic objectives in each market.

As USMEF develops tactics to achieve its strategic objectives, it breaks each market into four unique sectors roughly corresponding to the distribution flow of product as follows: Trade (importers, distributors, processors), HRI (Hotel, Restaurant, Institution), Retail, and Consumer. The more developed the market, the further down this distribution chain USMEF’s activities will reach. To create further opportunities for U.S. beef, USMEF divides each of these sectors into smaller segments. For example, the HRI sector may be divided into family style eateries, BBQ chains, white tablecloth restaurants, local cuisine, and catering. The opportunities presented in these submarkets provide new areas for growth.

The targeted integrated programs that USMEF conducts in support of its objectives may be similar in all markets, though their implementation and the specific messages delivered through these activities are tailored to fit target audiences in each market and sector. A brief description of the types of activities conducted for both Market Access and Market Development is provided below:

Trade Servicing – trade servicing encompasses the ongoing activities that are conducted in a market to build and maintain relationships, gather intelligence, connect buyers and sellers, communicate the U.S. industry message, and assist target accounts.

Trade Shows – trade shows bring buyers and sellers together to discuss business needs, reinforce personal relationships, become informed about trends, and demonstrate current and new products. Trade shows often feature a U.S. or meat pavilion in which USMEF and U.S. beef suppliers have booths for displaying product samples and meeting buyers. Trade shows range from large-scale events, to smaller shows focused on specific sectors or regions, as well as very targeted importer-hosted shows.

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Trade Teams – trade teams give participants (typically importers/distributors and decision-makers from targeted foodservice and retail companies) a thorough overview of U.S. beef production techniques and the industry so they are better informed about U.S. beef quality attributes, the range of products available, safety and inspection procedures, and trends in the foodservice and retail industries. In many cases, trade teams are an important means to facilitate business relationships between buyers and sellers.

Seminars/Training – seminars are used to deliver relevant information about U.S. beef to target audiences. As buyer education is one of the cornerstones of market development, seminars allow USMEF to reach buyers in a very direct manner, ranging from large-scale presentations to hands-on training and company-specific visits.

Communications – a variety of communications activities may be utilized to create a positive image for U.S. beef among targeted buyers and to stimulate purchases. The activities can help introduce new products, provide information about where to purchase U.S. beef, generate goodwill, and promote the quality and safety of the product. Specific activities may include advertising, article placements, and public relations events to keep U.S. beef top-of-mind among the target audience.

Promotions – promotions are used in conjunction with a full range of activities to encourage retailers and foodservice operators to become first-time/regular buyers of U.S. beef and then to expand the range of products they include in their menus and meat cases. Promotions also provide a means for delivering messages about the quality, taste, safety and versatility of U.S. beef directly to targeted consumers. USMEF participates jointly with HRI and retail partners in promotions that take many different forms, including new menu features, in-store tastings, and events/contests designed to increase purchases.

Issue Monitoring, Analysis and Reporting – USMEF updates U.S. exporters, industry trade associations and government agencies with information and analysis on import policies and requirements that could restrict U.S. beef exports. Activities include conferences, formal communications with relevant parties, and informal meetings.

Government and External Relations – USMEF communicates information about U.S. meat safety systems, U.S. government export requirements, U.S. production practices, and science-based assurances about the U.S. meat industry to foreign government authorities, opinion leaders, the media, the trade, and the general public in international markets. Activities include seminars, teams, educational materials, relationship-building, public relations and research.

Technical Support – USMEF provides details to the trade and local authorities on U.S. export specifications, certification procedures, safety inspection measures and quality assurance programs. Activities include seminars, educational materials and teams.

Although USMEF activities are primarily focused on the international markets, USMEF works closely with industry partners to educate U.S. producers on the significance of the beef export market. This partnership extends to CBB, FSBC, various state organizations, the media, and USMEF members, etc. USMEF’s Communications Department in Denver develops and distributes information on a daily basis, including international activity updates, market analysis reports, trade issue assessments, export requirement changes, export data, trade leads, and news releases. USMEF also distributes timely information through online sources and social media (e.g. USMEF website, Facebook, Twitter). Additionally, USMEF participates in and presents export market reports at industry meetings as requested.

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B. Costs for this AR:Source of Funding Total Direct Costs Implementation

Beef Board/BPOC $7,730,201 $5,584,685 $2,145,516Federation of SBCs (FSBCs) $1,759,999 $1,271,515 $488,484USDA/MAP $9,973,500 $9,973,500 $0

Total Cost $19,463,700 $16,829,700 $2,634,000

C. Start date: 10/1/14 Completion date: 9/30/15

II. PLANNING INFORMATION FOR THIS AR

A. Long Range Plan Core Strategies/Demand Drivers Addressed by This AR: Capitalize on global growth opportunities

B. Committee(s) recommendations for this AR: All Committees and Subcommittees reviewing activities in this AR will provide tactic scoring and feedback. These include the Global Growth Committee.

III. PROGRAM INFORMATION FOR THIS AR

A. Long Range Plan Core Strategy 4: Capitalize on global growth opportunities

Strategy 4 Proposed Cost*: $9,490,200

Specific Tactic Information:

Tactic 4A: Market Development – ASEAN

ASEAN BackgroundIn 2013, exports of U.S. beef plus variety meat to the ASEAN region decreased 59 percent in volume to 22,772 mt and 49 percent in value to $118 million. This decline was driven by a steep drop in exports to Vietnam, down 89 percent in volume to 4,459 mt and 83 percent in value to $27 million. Exports to Indonesia performed well in the latter part of the year after some relaxation in import licensing requirements, with year-end totals reaching 5,032 mt (up 206 percent) valued at $17 million (up 97 percent). Exports to the Philippines were down 2 percent in volume to 11,389 mt, but value increased 21 percent to $55 million.

Export forecasts for 2014 and 2015 are 26,000 mt valued at $130.1 million and 27,119 mt valued at $138.9 million, respectively.

ASEAN Market DriversFoodservice Demand: Consumers in several markets in the region can now afford to spend more on imported food as the middle class continues to grow. As more international restaurant chains open, beef consumption is expanding to new market segments. After witnessing how well alternative U.S. beef cuts perform in various menu applications, many chefs have begun to utilize these items in their operations to provide a better tasting meal for their customers while still maintaining profitability.

* Proposed Cost includes Beef Board/BPOC plus Federation.3

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Retail Sector Modernization: Opportunities are growing across the region as the retail sector transitions to modern supermarkets. More importers are setting up cutting/processing facilities to further penetrate the retail sector with tray-pack/retail-pack beef items which are preferred for easy inventory replenishment.Convenience Store & Quick-Serve Restaurant Growth: With significant growth in the convenience store and quick-serve restaurant segments, operators are looking to source lower-cost cuts while also maintaining quality. In the Philippines, for example, there are growing opportunities for alternative U.S. beef items such as short plate, cow rib roll and beef loin tail that with proper handling and treatment can produce an excellent product for quick preparation.Potential Supply Challenges: The ASEAN region is facing price increases and supply challenges as product flows to higher margin markets like Japan with its newly expanded access for U.S. beef. This has created a need for more affordable U.S. beef alternative items, including different grades, cuts or preparation methods. While high prices may impact market share, there are loyal users that will still insist on maintaining product origin consistency, though with some modification of the specific items used.

ASEAN Strategic Objectives Emphasize the benefits of grain-fed U.S. alternative cuts vs. grass-fed traditional cuts

from other sources. Introduce foodservice buyers to secondary cuts that only require simple preparation

but present a higher perceived value of the finished product. Work with distributors to provide merchandising assistance to help their retail

customers effectively promote U.S. beef. Educate processors on using U.S. beef variety meat such as hearts and livers as

standard input material. Explore expanded use of sirloin and round cuts, and increase the market for >30-

month and no-roll items.

ASEAN Tactical Response Conduct seminars to teach foodservice end-users about the profitability of

underutilized cuts and how to incorporate these items into their restaurant concepts. Target key food distributors, chefs, purchasing managers and restaurant owners to

address company-specific opportunities and challenges. Continue to focus on new opportunities, including expanding the marketing reach to

new HRI and retail subsectors in targeted markets.

Measurable objectives:o 83% of targeted trade accounts understand the profit potential of and have a

favorable attitude towards U.S. beef based on information provided by USMEF.o 80% of targeted HRI accounts regularly feature/promote U.S. beef.o 86% of targeted retailers regularly stock U.S. beef.

Proposed cost*: $293,530 (Direct + Estimated Implementation)

Tactic 4B: Market Access – ASEANUSMEF will contribute to and support initiatives to eliminate trade-restrictive policies and requirements in the ASEAN region, and keep the U.S. industry informed on critical changes in local government regulations and emerging issues in the region.

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ASEAN Noteworthy Market Access Issues include a) BSE-related restrictions on imports of U.S. beef in Singapore, Vietnam and Thailand; b) Vietnam’s revised acceptable residue levels for selected chemical compounds in meat; and c) other non-science based barriers throughout the region.

Measurable Objectives:o USMEF will contribute to and support initiatives to eliminate trade restrictive policies.o 80% of USMEF members will report that they receive the information they need from

USMEF related to market access.


Tactic 4C: Market Development – Caribbean

Caribbean BackgroundIn 2013, exports of U.S. beef plus beef variety meat to the Caribbean region were 15,648 mt valued at $87.7 million, down 11 percent in volume and 7 percent in value. Jamaica was the region’s leading volume destination for U.S. beef at 4,692 mt valued at $15 million. The Bahamas was the region’s leading value destination at 3,068 mt valued at $19 million.


Caribbean Market DriversCost Control: As restaurateurs and retailers strive to manage increasing costs, there is growing interest in sourcing smaller, portion controlled cuts (i.e. pre-cut, steak-ready specifications) that reduce labor and excess trim costs. Economic Challenges: Caribbean consumers tend to be price-sensitive due to the region’s relatively high unemployment rates, marginal GDP growth and high import duties on certain islands. To maintain a presence for beef in the retail case and on restaurant menus, buyers are increasingly looking to underutilized cuts that provide quality at an affordable price.Transitioning Retail: Retail outlets continue the transition from frozen to chilled beef products. However, retailers working with fresh beef are experiencing handling issues such as shrink and inconsistent cold chain infrastructure.New Cooking Styles: Island locals predominantly use slow cooking methods and stew recipes for beef. The availability and increased awareness of higher quality beef products has spurred interest in other cooking techniques such as grilling. This emerging cooking concept has retailers looking to introduce new items, especially chilled beef cuts suitable for the grill.

Caribbean Strategic Objectives Enhance buyer understanding of the U.S. beef grading system and highlight the

value/price relationship between quality grades and affordable cuts. Demonstrate the value proposition of case-ready and portion controlled products (e.g.

strip, ribeye, top sirloin and flat iron) to retail and HRI accounts. Build and maintain a presence for U.S. beef in retail and on restaurant menus by

introducing underutilized and low-cost cuts such as bottom sirloin flap, tri-tip, brisket, chuckeye roll, shoulder clod and knuckle.

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Support the development of a modern cold chain and educate buyers on the proper handling of chilled beef.

Educate retail staff on fresh U.S. beef cuts ideal for grilling.

Caribbean Tactical Response Introduce U.S. exporters to buyers looking for chilled and portion controlled beef cuts. Conduct deskside seminars with distributors and chefs to illustrate the cost benefits

of purchasing underutilized U.S. beef cuts at a higher quality grade for restaurant menus.

Educate chefs and wait staff on the attributes of U.S. beef and new cooking methods, and support targeted restaurant promotional efforts.

Conduct retail training on proper handling and storage of chilled U.S. beef, including shrink control.

Demonstrate grilling techniques to retail meat staff so they can market suitable U.S. beef cuts to store customers.

Develop educational handouts for the retail meat case that include recipe ideas to promote the “Great on the Grill” concept.

Measurable objectives: (Target Audiences for Evaluation adjusted for 2015)o 91% of targeted importers/distributors understand the supply/quality/value

relationships of U.S. beef based on information provided by USMEF.o 88% of targeted HRI accounts promote new ways to use popular cuts or an

alternative cut of U.S. beef to their customers.o 62% of targeted retailers understand how to properly handle and merchandise U.S.

beef.


Tactic 4D: Market Access – CaribbeanUSMEF will contribute to and support initiatives to eliminate trade-restrictive policies and requirements in the Caribbean region, and keep the U.S. industry informed on critical changes in local government regulations and emerging issues in the region.

Caribbean Noteworthy Market Access Issues include a) BSE-related restrictions on imports of U.S. beef in St. Lucia; and b) b) Jamaica’s excessively high import duties on U.S. beef.




Tactic 4E: Market Development – Central America + Dominican Republic

Central America + DR Background In 2013, exports of U.S. beef plus variety meat to the Central America + Dominican Republic region were up 4 percent to 11,172 mt, with value up 9 percent to $75 million. Increased exports to Panama (1,488 mt/+74%; $10.1 million/+74%), Honduras (1,247

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mt/+28%; $5.1 million/+25%) and Costa Rica (771 mt/+32%; $4.4 million/+14%) helped drive this growth. Exports to the DR, the region’s largest market, were 3,831 mt valued at $34 million, up 3 percent in volume and 4 percent in value.


Central America + DR Market Drivers Growing Demand for Beef: Most countries in Central America continue to increase beef imports, though in many markets, the U.S. is not the leading supplier. High global beef prices and restricted supplies will challenge exports to the region, but will also provide opportunities for imported value items that are more price-competitive with domestic product. Education remains paramount as these are emerging markets and most market participants are not well-versed in the attributes of U.S. beef.Dynamic Foodservice Growth: With more U.S. beef flowing into the region, restaurants are adding new cuts to their menus. Consumers are now developing a taste for flavorful U.S. beef cooked “medium” and simply prepared with salt and pepper, rather than tough domestic beef cooked medium-well and marinated. New opportunities are developing for expanding the variety of U.S. beef products utilized and extending the marketing reach to new HRI segments.Favorable Access in the Region: This U.S.-Panama Free Trade Agreement, implemented in 2012, immediately eliminated duties on Choice and Prime graded U.S. beef as well as variety meats. Other duty reductions will begin in year 6, reaching zero by year 15. The CAFTA-DR FTA provides duty-free access for a limited quantity (1,540 mt in 2014) of U.S. beef exports to Guatemala, an 8% out-of-quota duty, and no duty for Choice and Prime beef cuts.

Central America + DR Strategic Objectives Educate buyers on the range of U.S. beef available to expand their product portfolios,

and train them on meat management and purge reduction for better yields. Assist leading importers and distributors in sourcing alternative U.S. beef cuts such

as inside round. Leverage the benefits of the U.S.-Panama FTA by identifying niche HRI and retail

segments for high grade U.S. beef as well as additional areas for variety meats. Work with DR foodservice to increase use of value cuts, and target new retail chains

to expand the market. Develop region-wide programs with large retailers.

Central America + DR Tactical Response Facilitate sales by directly bringing buyers together with U.S. suppliers. Promote value cuts in the HRI and retail sectors (e.g. top blade “California cut,” sliced

shoulder clod “Texas steak,” arm roast, and petite tender). Provide training on the proper handling and merchandising of unfamiliar cuts. Introduce buyers to low-cost alternative cuts (e.g. chuck tender, shoulder clod, and

top sirloin butt). Continue to focus on new opportunities, including expanding into new sectors.

Measurable Objectives: o 50% of targeted importers/distributors consistently source and successfully promote

U.S. beef to their downstream customers.

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o 37% of targeted HRI accounts understand the quality and profit potential of U.S. beef.

o 60% of targeted retailers consistently incorporate suggested merchandising methods to promote the quality attributes of U.S. beef.


Tactic 4F: Market Access – Central America + Dominican RepublicUSMEF will contribute to and support initiatives to eliminate and prevent trade-restrictive policies and requirements in the Central America + Dominican Republic region, and keep the U.S. industry informed of critical changes in local government regulations and emerging issues in the region.

Central America + DR Noteworthy Market Access Issues include a) BSE-related restrictions on U.S. beef imports in some countries in the region; b) lack of trust among some Central American authorities regarding U.S. export documentation; c) confusion about the rule of origin of U.S. meat due to the U.S. Country of Origin Labeling law; and d) possible removal of an exoneration on a consumption tax on U.S. Choice and Prime beef cuts in Honduras.




Tactic 4G: Market Development – China/Hong Kong

China/Hong Kong BackgroundIn 2013, Mainland China remained closed to U.S. beef, but new records were set for U.S. beef plus variety meat exports to Hong Kong of 130,017 mt (up 100 percent) valued at $823 million (up 142 percent). In February 2013, Hong Kong began accepting U.S. boneless beef from cattle of all ages, and bone-in beef from cattle less than 30 months of age, and Macau followed with the same easing of requirements later in the year.

Export forecasts for 2014 and 2015 are 147,000 mt valued at $979 million and 160,049 mt valued at $1.071 billion, respectively.

China/Hong Kong Market DriversImproved Access to Hong Kong & Macau: Expanded access for U.S. beef in Hong Kong and Macau has dramatically boosted exports, and both markets are poised to allow access for offal and bone-in products from cattle over thirty-months-of-age. With regard to China, partial access is expected by the end of 2014 or early 2015.Convenience Items: Urbanization, rising incomes and the build-out of modern retail chains are driving convenience offerings, and retailers are allocating more space to prepared and packaged products. Convenience items such as deli meats and ready-to-use frozen meat packs for hot pots and kebobs offer healthy, at-home meal alternatives for consumers with busy lifestyles.

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Increasing Preference for Fresh Beef: As consumers place more emphasis on food safety, chilled beef products are gradually replacing traditional hot carcass cuts. Daily visits to the market are becoming less common, thus the safety aspects of chilled beef are now more important in promoting retail sales.Booming Beef Demand: The continued rapid growth of China’s economy is resulting in a growing middle class with increased spending power for higher quality items like beef. The rise of China’s online retail segment, which yields more sales than eBay and Amazon combined, is also helping sell more meat products. Beef imports are expected to grow at least 10 percent annually for the next five years in order to keep up with growing consumer demand. Since U.S. beef is still banned in China, Australia, Uruguay and Canada are benefiting from China’s increased imports, especially in the flourishing foodservice and retail sectors.

China/Hong Kong Strategic Objectives Educate the trade on the variety of bone-in and offal products that are available in

Hong Kong and Macau. Continue to build awareness of the quality and safety aspects of U.S. chilled and

frozen portion control products at retail, and chilled and frozen sub-primal cuts for foodservice.

Expand interaction with large foodservice operators such as casino restaurants and high-end dining establishments in Macau, the world’s largest gambling destination.

Explore new lower-cost chilled U.S. beef cuts with mass retail chains in Hong Kong. Focus on new product opportunities, including convenience and pre-cooked items

featuring U.S. beef. Provide fact-based information on the safety, quality and market availability of U.S.

beef to build confidence throughout the region (including China in anticipation of the market reopening).

China/Hong Kong Tactical Response Develop recipes and merchandising ideas for new cuts for HRI operators, chefs and

retailers, and conduct tasting demonstrations and targeted promotions to encourage purchases of chilled and frozen U.S. beef.

Introduce value-added convenience items at retail, specifically processed products such as deli meats, corned beef and hot dogs.

Continue efforts to help fast food restaurants adopt alternative U.S. beef cuts from the chuck, plate and round.

Utilize mass media and social media to educate consumers on both high-end and value options available from U.S. beef.

Develop online commerce channels to sell U.S. beef, especially in China once market access is restored.

Educate Chinese buyers and chefs about the quality attributes of U.S. beef in preparation for future access.

Continue to build relationships with government officials and key influencers, and draw attention to the status of China’s domestic beef industry and its declining ability to meet consumers’ growing beef demands.

Measurable Objectives: (Target Audiences for Evaluation adjusted for 2015)o 62% of targeted importers/distributors understand the supply capabilities and quality

attributes of U.S. beef based on information provided by USMEF.

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o 71% of targeted Hong Kong HRI outlets/chains regularly use U.S. beef and actively participate in and/or contribute to USMEF promotions.

o 100% of targeted Hong Kong retailers regularly feature two U.S. loin cuts and one underutilized cut.


Tactic 4H: Market Access – China/Hong KongUSMEF will contribute to and support initiatives to eliminate/prevent trade-restrictive policies and requirements in the China/Hong Kong region, and keep the U.S. industry informed of critical changes in Chinese government regulations and emerging issues in the region.

China/Hong Kong Noteworthy Market Access Issues include China’s ban on beef imports from the U.S.; b) China’s zero tolerance policy on the presence of beta-agonists, hormones and pathogens in red meat imports; c) potential issues with China’s opaque quarantine clearance procedures/regulations on chilled red meat imports; and d) new licensing requirements for processed meat exporters to China.




Tactic 4I: Market Development – Europe

Europe BackgroundAccording to U.S. Census data, 2013 exports of U.S. beef plus variety meat to the EU were down 6 percent in volume to 23,425 mt compared to 2012, with value up 7 percent to $252 million. However, according to EU import data, which is considered a more accurate measure of U.S. trade activity in this unique market, imports of U.S. beef were up 6 percent to 17,306 mt valued at $217 million.

Export forecasts for 2014 and 2015 are 23,500 mt valued at $260 million and 23,500 mt valued at $265.2 million, respectively.

Europe Market DriversConsumer Search for Premium Products: Although consumers may reduce the frequency of purchasing premium foods, they spend more money as they seek the best quality. Despite the decline in overall beef consumption, there is increased demand for high-quality, high-priced beef in niche consumer segments. Even with record high prices in 2014, demand for U.S. beef has remained robust and many users maintain there is simply no alternative with equivalent quality. However, many U.S. ranchers are no longer finding it as profitable to produce cattle for the EU and are instead selling their cattle in the open market, placing significant pressure on U.S. beef supplies destined for the EU market.Retailers Seek Differentiation: Retailers tackle competition not only with price, but also with new, high-quality products and original packaging. Although U.S. beef has

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been sold mainly in specialty shops, in most EU countries, more supermarkets are showing an increasing interest in having it on their shelves. Although retail distribution is quite concentrated, there are a number of grocery chains within Europe that choose to feature U.S. beef to elevate their image, vary their offerings, and compete with others.Fierce Restaurant Competition: In the current economic climate, many restaurants are using price to compete, while others are instead using techniques such as dry aging to add value and differentiate high quality beef. However, with high U.S. beef prices and a volatile Euro/Dollar exchange rate, U.S. beef is facing increasing pressure from growing shipments of significantly cheaper grain-fed beef from Australia and Uruguay.

Europe Strategic Objectives Focus on primary markets Germany, Italy and the UK, and secondary markets

France, Spain and Sweden. Drive the attention of distributors and their client chefs to U.S. beef alternative cuts,

which offer value and versatility. Educate distributors and consumers about U.S. beef attributes and how to use

different cuts. Demonstrate to chefs the wide range of culinary preparations for various cuts. Work toward the elimination of technical and sanitary barriers, as well as expansion

of the duty-free quota, and support revocation of restrictive European trade barriers.

Europe Tactical Response Continue working with the trade to expand demand for a range of cuts, specifically

forequarter sets. Gather market intelligence to better understand the needs and the opinions of local

stakeholders. Establish distribution links for U.S. beef and conduct cost-effective joint promotion

activities with local distributors. Expand online social media activities on Facebook (“The Marbled Meat Club”),

YouTube and Twitter. Identify new markets, niches and trends to further build demand for high-quality U.S.

beef.

Measurable Objectives: (Target Audiences for Evaluation adjusted for 2015)o 75% of targeted distributors consistently purchase U.S. beef year-round. o 25% of targeted distributors purchase muscle cuts other than traditional loin steak

cuts.o 33% of newly targeted retailers make trial purchases of U.S. beef.


Tactic 4J: Market Access – EuropeUSMEF will contribute to and support initiatives to eliminate trade-restrictive European policies and requirements, and keep the U.S. industry informed on critical changes in EU government regulations and emerging issues in the region.

Europe Noteworthy Market Access Issues include a) restrictions on the use of most pathogen reduction treatments used in the U.S.; b) the ban on the use of beta-agonists and hormones in red meat production; c) high tariffs and relatively small tariff rate

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quotas; and d) the tendency to adopt restrictive measures regarding animal welfare, cloned animals, and the environmental impact of meat production.




Tactic 4K: Market Development – Japan

Japan BackgroundIn 2013, U.S. beef plus variety meat exports to Japan increased 54 percent in volume to 234,615 mt and 35 percent in value to $1.389 billion, making Japan the largest volume and value market for U.S. beef. The February 2013 opening of Japan to U.S. beef from cattle less than 30 months of age has helped boost exports to this key market.

Export forecasts for 2014 and 2015 are 248,000 mt valued at $1.546 billion and 255,000 mt valued at $1.620 billion, respectively.

Japan Market DriversImproved Access: Expanded U.S. beef access allows for consistent, year-round supplies of a wider range of products including variety meat, prime grades and branded items that were previously limited or unavailable. Yakiniku Growth: Japan’s yakiniku industry, which is reliant on large volumes of variety meats, declined by nearly one third after U.S. beef was banned from the market in 2003. With improved access to U.S. beef, the industry is poised for a resurgence and is expected to expand to over 22,000 outlets in the next 5 years. Convenience Store (CVS) Opportunities: The CVS segment’s focus on fresh, convenient foods is resulting in one of the fastest growing retail categories in Japan. With over 50,000 outlets nationwide serving 15 million customer visits per day, CVS chains are looking to expand their offerings of ready-made meat items. Regional Retail Chains: Over the last 10 years, regional retailers were unable to access U.S. beef due to inconsistent supplies, resulting in a generation of buyers and consumers unaware of U.S. beef’s attributes. Branded & “Story” Beef: Competition among retail chains is fierce, with each vying for differentiation in product supplies, using both domestic and imported brands to alleviate safety concerns and meet demand for high-quality food items. Nutrient Rich Proteins: Japanese consumers are increasingly demanding healthy and nutritionally balanced foods, especially among the elderly. More consumers understand the benefits and importance of foods for specific health functions (“functional foods”) including beef’s functionality in immune and muscular health. Online Shopping: Internet retailing is becoming more popular among both young, single career-seekers and elderly consumers for the convenience it provides. Social Media: Japanese consumers view social media as a reliable way to quickly access product information. Expanding the information available online helps increase the understanding of a food item’s quality and safety, it’s use in healthy recipes, and where products can be purchased.

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Japan Strategic Objectives Educate end-users and consumers on the unique quality and nutritional attributes of

U.S. beef as well as introduce bone-in items, which are new to the market. Reintroduce U.S. beef variety meats and other key BBQ cuts (beef tongue, skirt

meat, hanging tender, short plate) to the Yakiniku industry. Ensure 5-star and leading hotel restaurants understand the quality and value of U.S.

Prime grade beef compared to domestic Wagyu and other competing product. Increase U.S. beef usage in bento boxes as well as new menu items at CVS and

“deli” chains. Utilize U.S. brands and “stories” to differentiate products and establish consumer

trust and loyalty. Expand programs to target buyers at small and mid-sized retail chains outside the

major metropolitan areas.

Japan Tactical Response Conduct training for new regional target accounts, and provide promotional support

as appropriate. Work across sectors to introduce, feature, and develop unique U.S. brands/stories to

capture new market segments and build a positive reputation. Train Yakiniku Association member companies on the availability, quality, and value

of U.S. beef. Educate chefs from high-end restaurants on the unique attributes of U.S. Prime grade

beef. Collaborate with CVS chains and their suppliers to develop new items using a variety

of U.S. beef cuts. Provide cooking and merchandising information on new-to-market items (e.g. T-bone,

bone-in ribeye). Conduct consumer programs to provide U.S. beef nutritional information and

healthy/”functional” recipes. Use social media outlets and blogger sites to effectively expand the reach of the U.S.

beef message. Work with retail chains that have online shopping/delivery to broaden the customer

base for U.S. beef.

Measurable Objectives: (Target Audiences for Evaluation adjusted for 2015)o 43% of targeted importers/distributors consistently purchase 2 or more U.S. beef

alternative cuts.o 45% of targeted HRI/retail accounts consistently feature 2 or more U.S. beef cuts.o 66% of targeted bento/convenience stores offer menu items featuring U.S. beef.o 22% of targeted consumers purchased U.S. beef within the past 2 weeks.

Proposed cost*: $3,258,592 (Direct + Estimated Implementation)

Tactic 4L: Market Access – JapanUSMEF will contribute to and support initiatives to eliminate trade-restrictive policies and requirements in Japan, work to strengthen confidence in the U.S. industry as a producer and exporter of beef, and keep the U.S. industry informed on critical changes in Japanese government regulations and emerging issues.

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Japan Noteworthy Market Access Issues include a) limits on imports to U.S. beef from cattle under thirty months-of-age; b) very high duties on imported beef; c) consumer concerns about the impact of production practices including GMO feed, feed additives, antibiotics, cloning, animal welfare, sustainable production practices, environmental issues, and safety and verification systems; and d) bilateral trade agreements and tariff eliminations proposed in the Trans-Pacific Partnership (TPP).




Tactic 4M: Market Development – Korea

Korea BackgroundIn 2013, U.S. beef plus variety meat exports to South Korea were down 16 percent in volume to 105,406 mt, though value increased 5 percent to $609 million. Despite obstacles in 2013 with excess domestic meat in the market, this situation is normalizing and prospects for U.S. beef exports to Korea in 2014 and beyond are very positive, particularly with the benefits of the U.S.-Korea Free Trade Agreement (KORUS FTA) that went into effect in 2012. The reduction of beef duties to zero over 15 years is expected to help boost U.S. exports to Korea to more than $1 billion per year by the end of that time period.


Korea Market DriversDomestic Beef Supplies: Although self-sufficiency is currently around 50%, Korea’s domestic beef herd is gradually declining. Domestic beef self-sufficiency is expected to decrease ten percent by 2015, expanding the need for imported beef, especially for popular, high-quality items. Chilled & Branded Products: Improved market access for U.S. beef in other Asian markets has tightened the supplies of commonly purchased U.S. beef cuts (i.e. short ribs) by Korean importers. To adjust to increased competition, Korean buyers are showing more interest in chilled and branded beef items. Additionally, as consumers begin to focus more on quality standards when making purchasing decisions, foodservice and retail operators are also exploring opportunities for merchandising chilled/branded beef products. Foodservice Distribution Reformation: Foodservice distributors in Korea are generally small to medium-sized companies faced with inefficiencies resulting in higher costs to their customers. As larger companies and conglomerates begin to enter the market, simplified supply channels will help reduce distribution costs allowing for greater penetration of higher-quality beef products, such as chilled and branded products, at more affordable prices. Single-Person Culture: Overall meat consumption is growing among Korean consumers, and changing demographics dictate how meat is being consumed. Single-person households account for nearly 25% of the total population, prompting the retail

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and foodservice sectors to develop affordable and easy-to-prepare beef dishes for quality home-meal-replacement (HMR) foods.Food & Social Media: Food-related blogs, forums and networks are numerous and heavily utilized by Korean consumers. Social media platforms are powerful tools for consumer communications regarding food, which presents the opportunity to reach a broad and diverse audience to highlight and discuss the positive aspects of U.S. beef.Online Shopping: Online retailing is expected to remain one of the fastest growing segments as more and more consumers are attracted to this innovative shopping tool for convenience and price. The demand for beef items, especially chilled products, will continue to increase with further development of this dynamic retail channel.Tourism Growth: Korea’s port city of Busan, known for its beaches, nature reserves and reasonable prices, is a popular destination for both domestic travelers and tourists from surrounding countries. Moreover, Busan’s vibrant food culture is another attraction, elevating the use of high-quality beef on high-end restaurant menus. U.S. Korea Free Trade Agreement: With implementation of the KORUS FTA in 2012, the duty on U.S. beef over 15 years will decline to zero (from 40%) for muscle cuts and to 18% for offals. This will help U.S. beef, especially chilled product, increase its competitive advantage in this high-value market.

Korea Strategic Objectives Evolve the “To Trust” campaign to focus more on the positive of attributes of U.S.

beef through “World Class Beef” messaging, highlighting the safety and quality of U.S. beef, especially to younger consumers/families.

Build awareness for U.S. chilled and branded beef products and identify opportunities to introduce and develop the market for new items and preparation techniques/trends (e.g. American BBQ).

Promote the use of underutilized cuts that offer both quality and value, especially compared to domestic beef.

Target large foodservice subsectors such as catering services which demand high-quality, lower-cost inputs.

Capitalize on the long-term impact of the KORUS FTA and the U.S. industry’s ability to provide affordable and consistent supplies of specific cuts.

Korea Tactical Response Use traditional and online media to educate buyers and consumers on the quality,

safety and value of U.S. grain-fed beef, particularly U.S. chilled beef, and host consumer events highlighting the overall enjoyment of U.S. beef, leveraging social media forums.

Connect U.S. beef suppliers to Korean importers through various trade sector activities, and showcase the advantages of U.S. brands.

Introduce U.S. chilled and branded beef to 5-star hotels and retail chains looking to differentiate their offerings, and provide customized marketing support as appropriate.

Promote economically priced items that can be consistently supplied for large-scale foodservice, such as hanging tender, chuck flap tail and chuck eye roll.

Provide training to high-end restaurants and retailers on the handling, cooking and merchandising of specialty products such as dry-aged U.S. beef.

Collaborate with chefs to develop premium convenience food and HMR options using underutilized U.S. beef cuts, and demonstrate the versatility and quality of

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economical beef cuts to the distributor, foodservice and retail sectors for use in HMR items.

Measurable Objectives: (Target Audiences for Evaluation adjusted for 2015)o 47% of targeted trade accounts confident in the consistent supply of U.S. chilled

beef.o 75% of targeted Korean BBQ & steakhouse accounts feature a (new) U.S. beef item

on the menu.o 68% of targeted hotel/banquet accounts feature U.S. beef on their menus.o 75% of targeted retailers merchandise a wide range of U.S. beef items.


Tactic 4N: Market Access – KoreaUSMEF will contribute to and support initiatives to eliminate trade-restrictive, non-science-based policies and requirements in Korea, strengthen confidence in the U.S. industry as a producer and exporter of beef, and keep the U.S. industry informed on critical changes in Korean government regulations and emerging issues.

Korea Noteworthy Market Access Issues include a) Korea’s changing feed and drug registration process, which could affect the status of beta agonists that are commonly fed to cattle in the U.S.; b) a ban on imports of U.S. beef and beef products from cattle over 30 months of age; and c) pending issues with under 30-month beef access (such as processed beef, small intestine, tongue, casings, etc.).




Tactic 4O: Market Development – Mexico

Mexico BackgroundIn 2013, Mexico was the second largest volume market for U.S. beef (after Japan), with imports1 of U.S. beef plus variety meat up 10 percent, reaching 201,833 mt valued at $1.003 billion. U.S. beef represented 90 percent of Mexico’s imported beef market for the year (up from 87 percent in 2012).

Export forecasts for 2014 and 2015 are 228,763 mt valued at $1.029 billion and 245,308 mt valued at $1.140 billion, respectively.

Mexico Market DriversMarket Diversification: Mexican consumers love beef, and U.S. beef has a high-quality, safe image. However, U.S. beef is known mainly for high-end cuts, which limits the perceived culinary applications. Higher U.S. beef prices, less availability of popular cuts, and a relatively weak peso have constrained exports to the Mexican market in recent years. As such, penetrating diverse market segments with a broad range of

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products is becoming more important for finding new buyers and shifting consumer attitudes.High-end and Specialty Retail: While strong sales at high-end supermarkets continue, meat boutiques, particularly in northern Mexico, are finding success selling high-quality U.S. beef on weekends and are looking to increase sales during the workweek. Further, the implementation of USDA Choice programs at high-end retail chains has elicited increased purchases from wealthier consumers attracted to the unparalleled quality, but also undeterred by higher prices.Record-High Prices: If historically high U.S. beef prices continue, increasing numbers of Mexican consumers will struggle to afford product even as Mexico’s economy is expected to grow more robustly. However, supplies of Mexican beef are also severely limited, so the negative impact of high U.S. beef prices could be partially offset by less domestic beef available for consumption. Less expensive alternative U.S. beef cuts could offer restaurateurs and retailers options for serving consumers confronted with high beef prices.Chef Product Knowledge: As beef prices remain high, restaurants are forced to look for ways to keep input costs low. Chefs know about traditional beef cuts, but they do not realize how the comparative costs, flavor profiles, and recipe options for alternative U.S. beef cuts could provide cost efficiencies for their menus. Larger restaurant chains are exploring how U.S. beef can be used more economically to raise customer satisfaction through consistently enjoyable eating experiences.

Mexico Strategic Objectives Train importers, distributors and processors about the attributes, handling, versatility

and profitability of U.S. beef for meeting a wide variety of buyers’ needs. Further penetrate the regional supermarket segment, which has not consistently

purchased U.S. beef. Work with restaurant chains to explore new recipes and cooking methods to

maximize profitability (e.g. less waste/purge), and develop new users/uses in specialty HRI segments that move large volumes of meat.

Expand programs to highlight new items, possibly including top sirloin, flank steak and chuck tender.

Educate retailers on the profit potential of various grades of U.S. beef.

Mexico Tactical Response Increase emphasis on value cuts (tri-tip, top sirloin, inside flank) as a substitute for

pricier, more-scarce, high-end middle meats, and offer restaurant management practical solutions to high U.S. prices and product availability challenges.

Train HRI and retail managers and staff to ensure U.S. beef is properly presented, promoted, merchandised, origin-identified and labeled.

Demonstrate to chefs the flavor performance, cost advantages and recipes for non-traditional cuts.

Intensify promotions with high-end retail outlets as well as with selected foodservice distributors whose customers are not as affected by high prices.

Implement a social media initiative to engage and educate the chef community.

Measurable Objectives:o 50% of targeted importers/distributors/processors actively promote a range of U.S.

beef cuts, including value cuts, highlighting the products’ quality attributes.

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o 60% of targeted restaurant chains actively feature/promote U.S. beef, including value cuts, to their customers.

o 86% of targeted retailers consistently incorporate suggested merchandizing methods to promote U.S. beef to their customers.


Tactic 4P: Market Access – MexicoUSMEF will contribute to and support initiatives to eliminate and prevent the imposition of trade-restrictive policies, regulations and procedures in Mexico, and keep the U.S. industry informed about critical changes in Mexican government requirements and emerging issues.

Mexico Noteworthy Market Access Issues include a) possible animal ID and traceability requirements, which could impede U.S. beef exports; b) yet to be implemented maximum residue levels; and c) proposed changes to inspection procedures.




Tactic 4Q: Market Development – Middle East

Middle East BackgroundIn 2013, U.S. beef plus variety meat exports to the Middle East region were 147,696 mt valued at $276 million, a decline of 3 percent in volume and 17 percent in value. Egypt remained by far the largest market in the region at 136,884 mt (-1 percent) valued at $165 million (-24 percent). Exports to the UAE jumped in value reaching $55 million (+12 percent), even though volume declined 4 percent to 5,010 mt. Saudi Arabia remained closed to U.S. beef throughout the year following the 2012 BSE case in the U.S.


Middle East Market DriversDemand for High-quality Imported Food: The Middle East imports a large share of its food to meet growing demand for premium items, including high-quality beef muscle cuts. The region’s large youth population is driving many of the trends in the food & beverage industry, with social media helping shape attitudes.Foodservice Expansion: The region’s flourishing HRI sector is a reflection of growing tourism and demand for new dining concepts. However, lack of knowledge about high-quality ingredients among foodservice staff and high staff turnover are major issues. Upper-end HRI operations require cost efficiency, but will not compromise on taste and quality, leading to increased interest in alternative cuts. Meanwhile, casual dining and fast food chains are booming, with lower-end, family-style restaurants now the top destination for utility grade middle meats.

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Retail Sector Growth: Retail growth, including international chains, continues at a rapid pace, with larger stores, such as hypermarkets, set to dominate market share over the next five years. There has been a remarkable change in shopping habits as consumers increasingly seek the convenience, ambience, and wider variety of products offered by the modern retail grocery segment. However, local distributors have been hesitant to promote U.S. beef muscle cuts with retailers because they lack the marketing and merchandising knowledge to effectively penetrate this sector. Some major retailers are importing beef directly from the U.S., diversifying their product offerings to include traditional and alternative cuts.Potential Supply Shortages and Record-High Prices: Higher prices have impacted muscle cut business to Egypt, traditionally the region’s largest importer of these items. With limited purchasing power and a local currency that has steadily devalued against the U.S. dollar over the last two years, this large market will remain very price sensitive. However, the average price paid for U.S. beef cuts by other countries in the region is the highest in the world, and demand continues to grow with little to no price sensitivity. There continue to be large infrastructure projects, in addition to the growing local populations and steadily increasing tourism, with very high dependence on imports to cover meat consumption needs.

Middle East Strategic Objectives Educate chefs and consumers about various muscle cuts and on proper cooking

techniques to avoid overcooking—a common problem in the region. Increase demand for underutilized cuts and end-meats (e.g. shoulder clod, chuck roll,

chuck tender, brisket, top round) by providing training and establishing acceptance of these items.

Tap into growth potential in franchise restaurants for chuck roll, petite tender medallions and thin cuts.

Use the internet and social media to promote U.S. beef in Egypt and across the region.

Middle East Tactical Response Emphasize muscle cuts for dining outlets, especially those producing their own

burgers (e.g. using U.S. chuck), as well as “shawarma” eateries. For fine dining outlets, steakhouses and family-style chains, focus on middle- and end-meat cuts.

Support in-store promotions with a goal of consistent, year-round sales of chilled U.S. beef, using cooking demonstrations and tastings to showcase rib-eye, top sirloin butt, chuck roll, heel, shank and striploin.

In Egypt, continue to reinforce the image of U.S. beef muscle cuts as the best quality option, so that while consumers might buy less often due to price considerations, many more consumers will seek out the product.

Measurable Objectives: o 53% of targeted importers/distributors have a favorable attitude toward U.S.

beef/bvm based on information provided by USMEF.o 77% of targeted HRI buyers regularly purchase U.S. beef/bvm.o 50% of targeted fine dining and casual family-style restaurants/chains hold a U.S.

beef promotion or use menu promotional materials.o 50% of targeted retail chains identify the origin of U.S. beef/bvm and actively

participate in USMEF promotions.

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Tactic 4R: Market Access – Middle EastUSMEF will contribute to and support initiatives to eliminate trade-restrictive policies and requirements in the Middle East, build and reinforce the region’s confidence in the U.S. industry as a producer and exporter of beef, and keep the U.S. industry informed on critical changes in local government regulations and emerging issues in the region.

Middle East Noteworthy Market Access Issues include Saudi Arabia’s U.S. beef due to the April 2012 atypical BSE finding in the United States.




Tactic 4S: Market Development – Russia / Greater Russian Region

Russia/Greater Russian Region BackgroundU.S. beef exports to Russia ground to a halt in February 2013 following an unresolved trade dispute over ractopamine residues. While Russian demand for U.S. beef was at an all-time high in 2012, U.S. beef plus variety meat exports to the Russian region in 2013 dropped 94 percent in volume to 4,686 mt and 98 percent in value to $5.9 million. Meanwhile, other countries in the region started growing in importance, such as Ukraine, where U.S. beef exports increased 134 percent to 1,990 mt.


Russia/Greater Russian Region Market DriversRussia remains closed to U.S. beef due to its zero tolerance for ractopamine residues. Further, Russia is striving to harmonize its food safety standards with those of the EU and will not allow the use of hormones in beef production. Thus U.S. beef’s return to Russia is not expected in the near term, and exporters could face significant constraints once the market opens. However, when access is restored, USMEF will again intensify its marketing activities to reassert the presence of U.S. beef in Russia.Regional Expansion: In addition to long-term customer retention work in Russia, USMEF has shifted its focus to other markets in the region, including Ukraine, Georgia, Azerbaijan and some Central Asian nations. In those countries with higher levels of beef consumption, opportunities for developing sales of high-quality U.S. beef are growing. In addition, several countries have strong traditions of utilizing offal products, indicating potential areas for growth for U.S. beef variety meat exports into the processing, HRI and retail sectors.Foodservice Opportunities: The HRI sector is almost entirely dependent on imported beef, and interest in high quality beef and variety meats continues to grow. With the current absence of both U.S. and Australian beef in Russia, the ability to offer high quality beef on the menu is very limited for restaurants. There is a real threat that a prolonged ban may lead many establishments to switch from steak to other types of

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cuisine. At the same time, HRI industry players continue to note that U.S. beef is among the best products and that market share will be regained once the situation normalizes. The solid reputation that U.S. beef has in Russia suggests that many restaurants will return U.S. beef to their menus when the market reopens. Meanwhile, as U.S. veal still has access to the Russian market, some high-end establishments have started to incorporate it into their menu concepts.

Russia/Greater Russian Region Strategic Objectives Regain market share in Russia once the market reopens, and restore buyer

knowledge/confidence. Build U.S. beef sales in the region, including variety meats and cuts for processing,

focusing on Uzbekistan, Ukraine, Georgia and Azerbaijan. Demonstrate to larger processors how U.S. beef can meet their needs, and gather

market intelligence on what attributes are most important (such as better packaging). Continue to focus on new opportunities, including increased alternative cut usage,

growth in chilled beef at retail, and online meat shops.

Russia/Greater Russian Region Tactical Response Create demand in the Russian region for a greater variety of beef cuts and grades, as

well as expand the number of foodservice and retail outlets selling U.S. beef and/or veal.

Engage more restaurants to try U.S. beef, such as alternative cuts for family-style dining and catering.

Train chefs on proper cooking techniques (e.g. not to overcook), and how to differentiate high quality, marbled U.S. beef from competing product.

Work with local importers/processors on expanding uses for U.S. beef (e.g. for portion control, as well as lower grade muscle cuts for processing).

Measurable Objectives: (Goals will be reexamined/updated based on market conditions)o 77% of targeted trade accounts understand U.S. beef’s quality attributes based on

information provided by USMEF.o 75% of targeted HRI outlets/restaurant chains regularly stock U.S. beef.o 69% of targeted retail outlets identify the origin of U.S. beef.o 38% of targeted retail outlets actively promote U.S. beef and its origin.


Tactic 4T: Market Access – Russia / Greater Russian RegionUSMEF will contribute to and support initiatives to eliminate trade-restrictive Russian policies and requirements, and keep the U.S. industry informed on critical changes in Russian government regulations and emerging issues.

Russian Region Noteworthy Market Access Issues include a) Russia’s zero tolerance policy on the presence of beta-agonists and synthetic hormones in beef; b) Russia’s near zero tolerance policy on the presence of selected pathogens (e.g., Salmonella); and c) Russia’s longstanding BSE-related restrictions on imports of U.S. beef.

Measurable Objectives:o USMEF will contribute to and support initiatives to eliminate trade restrictive policies.

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o 80% of USMEF members will report that they receive the information they need from USMEF related to market access.


Tactic 4U: Market Development – South America

South America BackgroundIn 2013, exports of U.S. beef plus variety meat to the South America region increased 29 percent in volume to 34,794 mt, with value up 19 percent to $116 million. Peru was the largest volume market in the region, with exports up 35 percent to 17,352 mt, and value up 10 percent to $33 million. Chile was the largest value market, with exports up 16 percent to $69 million, and volume up 13 percent to 12,908 mt.


South America Market DriversGrowing Markets: Strong economic growth and expanding populations mean the region’s middle class has more money to spend on premium food items. In Peru and Chile, consumers are already willing to pay higher prices for high-quality beef, and interest is developing in other markets. Although U.S. beef exports to South America have grown dramatically in the past few years, many market segments are still unfamiliar with U.S. beef, especially key buyers in the foodservice sector, and inefficient handling and lack of product knowledge have sometimes resulted in low yields.Cold Chain Management: The lack of proper cold chain management in some areas could limit the market for high quality products. In particular, retailers and restaurateurs outside capital cities often do not follow acceptable handling practices. Further, several retailers in the region are exploring direct import opportunities with U.S. suppliers as a cost saving measure. While this is a positive development, some stores are struggling with maintaining product integrity, mainly because of the high turnover rate among meat department personnel.Potential Supply Shortages and Record-High Prices: With buyers in other U.S. beef export destinations often willing to pay higher prices for product than in South America, the lack of availability of some items (e.g. tongue, heart, knuckle, tri-tip) is threatening to dampen market penetration. For example, Olive Garden restaurant recently opened in Peru, and after working with USMEF to purchase U.S. beef, pricing and sourcing issues caused the franchise to switch to Uruguayan beef just prior to opening. Additionally, other restaurants are now unable to source U.S. knuckle, an item USMEF successfully introduced into the market. Smaller Packaging at Retail: With high meat prices, some consumers are looking to purchase smaller quantities at affordable prices. Convenient sized packaging for chilled product—using the latest technologies to extend shelf life—could help draw more consumers to U.S. beef in the supermarket meat case.U.S.-Colombia Free Trade Agreement: This FTA provides duty-free access for unlimited volumes of high quality beef (Choice/Prime), and duty-free tariff rate quotas for beef other than Choice/Prime and (separately) for beef offal. Although Colombia is still a small market, exports in 2013 increased dramatically, jumping nearly 200 percent in volume (2,734 mt) and 171 percent in value ($9.1 million). For this price-driven market, a focus on affordable cuts that deliver quality is essential.

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South America Strategic Objectives Educate importers, distributors and other market stakeholders about the profitability

of U.S. beef value cuts and provide training on the proper handling and merchandising of unfamiliar cuts.

Work to substitute higher-quality alternative U.S. beef for local traditional cuts to maintain quality and margins in restaurants.

Identify and promote U.S. beef cuts at retail by improving product labels and maintaining product rotation to increase consumer confidence.

Facilitate sales by conducting activities that directly bring buyers together with U.S. suppliers, especially medium/small suppliers interested in growing exports to South America.

Continue to focus on new opportunities, including identifying niche markets for high-end products.

South America Tactical Response Provide training on proper meat handling and cold chain development for the HRI and

retail sectors to help mitigate problems and ensure that consumers enjoy a positive experience with U.S. beef.

Demonstrate to importers and purveyors that portion and repackage U.S. beef for distribution to end-consumers how to use the latest available technologies to preserve quality.

Continue working with supermarket chains to increase the number of U.S. cuts offered.

Utilize joint promotions to raise the visibility and image of U.S. beef in the market. Expand activities into secondary cities in key markets.

Measurable Objectives: (Target Audiences for Evaluation adjusted for 2015)o 53% of targeted importers/distributors consistently source U.S. beef.o 47% of targeted HRI outlets/chains regularly use U.S. beef.o 60% of targeted retailers identify the origin and promote the attributes of U.S. beef.


Tactic 4V: Market Access – South AmericaUSMEF will contribute to and support initiatives to eliminate trade-restrictive policies and requirements in the South America region, and keep the U.S. industry informed of critical changes in South American government regulations and emerging issues in the region.

South America Noteworthy Market Access Issues include a) BSE-related restrictions on U.S. beef imports in some countries in the region; and b) Chile’s restrictive beef labeling requirements.




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Tactic 4W: Market Development – Taiwan

Taiwan BackgroundIn 2013, U.S. beef plus variety meat exports to Taiwan increased 65 percent in volume to 32,181 mt, and 98 percent in value to $254 million. U.S. market share of the imported beef market jumped from 21 to 34 percent, taking share away from Australia and New Zealand.


Taiwan Market DriversConsumer Confidence: Despite past negative media portrayals and anti-U.S. beef campaigns, the perception of U.S. beef has been gradually improving, with market share growing as restaurants and retailers resume sales following the adoption of a maximum residue level (MRL) for ractopamine in 2012. Quality & Niche Product Growth: Consumer purchasing behaviors continue to evolve as the increased interest in new tastes and products shifts, and the focus on health, quality and value grows. As such, brands, natural/organic meat, and specialty breeds are becoming more popular. Western Dining: Throughout Taiwan, there is a growing presence of Western-style restaurants, many of which predominately feature U.S. beef on their menus. High-end dining establishments are looking to add value and uniqueness to menus through the use of new-to-market cuts and preparations, including dry-aged beef. Alternative Cuts: Increased demand in Japan and Korea for Asia-specific cuts such as chuck flap, top blade and boneless chuck short ribs are driving family-style restaurants and retail operators to seek alternative beef products that provide high quality at a competitive price.Online Retail: Online shopping is booming for consumers in Taiwan because of its convenience, product availability and economically priced items. As greater efficiencies in customer service attract more shoppers, the promotion of lower-cost items such as underutilized beef cuts is expected to expand.Mainland Tourism: The number of mainland Chinese tourists traveling to Taiwan reached a record high of nearly three million people in 2013. The Tourism Bureau of Taiwan anticipates mainland tourism to increase 17 percent in 2014, which is a welcome sign for the foodservice sector as Chinese tourists enjoying dining out at a variety of establishments ranging from beef noodle shops to high-end restaurants.

Taiwan Strategic Objectives Educate key commercial stakeholders (importers, restaurants, retailers) on U.S. beef

production safety. Introduce alternative high-quality U.S. beef cuts to targeted HRI buyers, such as

ribeye cap and petite tender. Reintroduce buyers and consumers to the various grades U.S. chilled beef (Select,

Choice, Prime) and highlight the versatility and profitability compared to the competition.

Broaden awareness of U.S. niche beef items, including natural/organic, branded and breed-specific products.

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Educate the foodservice sector on dry aging for cuts beyond short-loin, such as ribeye and tenderloin.

Continue to build relationship with HRI accounts in scenic/tourist areas, especially those restaurants that have high media exposure and are nationally well-known.

Utilize a unified theme and messages to create a favorable image of U.S. beef among consumers.

Taiwan Tactical Response Sponsor activities at leading restaurants to improve the market atmosphere and

rebuild confidence among consumers and other foodservice chains. Develop educational and POS materials to support the use of chilled U.S. beef,

including underutilized cuts, by the trade and their downstream partners, and encourage chefs to feature U.S. chilled beef in traditional and western-style cuisine.

Work with high-end HRI accounts on the utilization, preparation and promotion of specialty U.S. beef items such as branded, dry-aged, and natural/organic products.

Introduce top chefs in tourist regions to the range and quality of available U.S. beef cuts.

Target younger consumers through events and social media to promote venues/menus featuring U.S. beef, and use PR activities to illustrate that more and more Taiwanese consumers accept and enjoy U.S. beef.

Measurable Objectives: o 87% of targeted trade accounts have a favorable attitude toward U.S. beef based on

information provided by USMEF.o 62% of targeted trade accounts collaborate with downstream customers to promote

U.S. beef.o 40% of targeted restaurants actively participate in and contribute to USMEF

promotions to their customers.o 46% of targeted retailers actively promote the attributes of U.S. beef.


Tactic 4X: Market Access – TaiwanUSMEF will contribute to and support initiatives to eliminate trade-restrictive policies and requirements in Taiwan, strengthen confidence in the U.S. industry as a producer and exporter of beef, and keep the U.S. industry informed on critical changes in Taiwan government regulations and emerging issues.

Taiwan Noteworthy Market Access Issues include a) BSE-related restrictions on imports of U.S. ground beef and variety meat; b) Taiwan’s zero tolerance policy on the presence of zilpaterol residues in beef imports; and c) agricultural trade discussions related to the U.S.-Taiwan Trade and Investment Framework Agreement.




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Tactic 4Y: New Market Research & DevelopmentExisting USMEF programs and activities cover approximately 100 countries which represent the majority of U.S. beef exports. However, as the global economy improves, additional markets, as well as new segments in existing markets, continue to emerge, providing increased development opportunities for U.S. beef. In addition to these opportunities, further research in key strategic markets with high potential, such as China, will position the U.S. industry for rapid expansion and displacement of competitive products.

Shifting global dynamics, rapid development in areas such as Sub-Saharan Africa, and improving regional economies continue to provide new growth opportunities for the beef industry. In order to identify, develop and capitalize on additional growth opportunities in global markets for U.S. beef, USMEF will employ the following tactics: A) Conduct market, economic and technical research to identify and develop new opportunities for U.S. beef exports; and B) Educate and support targeted buyers in new markets about the quality of U.S. beef products and the commitment of the U.S. industry to building and maintaining supply relationships.


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IV. DETAILED BUDGET SUMMARY

Beef Board/BPOC Funding Request:Summary by Strategy & Tactic Funding

ManagerCompletion

DateTotal

Direct CostEst.Impl. Total

Strategy 4: Global Growth Opportunities Tactic 4A: ASEAN MD USMEF 09/30/15 $142,545 $96,548 $239,093 Tactic 4B: ASEAN MA USMEF 09/30/15 $0 $10,728 $10,728 Tactic 4C: Caribbean MD USMEF 09/30/15 $92,207 $19,310 $111,517 Tactic 4D: Caribbean MA USMEF 09/30/15 $0 $2,146 $2,146 Tactic 4E: Central America MD USMEF 09/30/15 $199,156 $57,929 $257,085 Tactic 4F: Central America MA USMEF 09/30/15 $3,258 $6,437 $9,695 Tactic 4G: China/HK MD USMEF 09/30/15 $271,447 $77,238 $348,685 Tactic 4H: China/HK MA USMEF 09/30/15 $8,145 $8,582 $16,727 Tactic 4I: Europe MD USMEF 09/30/15 $238,825 $96,548 $335,373 Tactic 4J: Europe MA USMEF 09/30/15 $1,629 $10,728 $12,357 Tactic 4K: Japan MD USMEF 09/30/15 $2,036,364 $617,908 $2,654,272 Tactic 4L: Japan MA USMEF 09/30/15 $40,727 $68,656 $109,383 Tactic 4M: Korea MD USMEF 09/30/15 $677,050 $251,025 $928,075 Tactic 4N: Korea MA USMEF 09/30/15 $16,291 $27,892 $44,183 Tactic 4O: Mexico MD USMEF 09/30/15 $836,294 $251,025 $1,087,319 Tactic 4P: Mexico MA USMEF 09/30/15 $20,364 $27,892 $48,256 Tactic 4Q: Middle East MD USMEF 09/30/15 $399,331 $38,619 $437,950 Tactic 4R: Middle East MA USMEF 09/30/15 $3,258 $4,291 $7,549 Tactic 4S: Russia MD USMEF 09/30/15 $101,329 $115,858 $217,187 Tactic 4T: Russia MA USMEF 09/30/15 $4,887 $12,873 $17,760 Tactic 4U: South America MD USMEF 09/30/15 $138,147 $19,310 $157,457 Tactic 4V: South America MA USMEF 09/30/15 $1,629 $2,146 $3,775 Tactic 4W: Taiwan MD USMEF 09/30/15 $274,420 $289,644 $564,064 Tactic 4X: Taiwan MA USMEF 09/30/15 $16,291 $32,183 $48,474 Tactic 4Y: New Markets USMEF 09/30/15 $61,091 - $61,091

Totals - Strategy 4 $5,584,685 $2,145,516 $7,730,201

Other Potential Funding Source(s): (Informational only)Summary by Strategy & Tactic Funding

Source *Completion

DateTotal


Strategy 4: Global Growth Opportunities Tactic 4A: ASEAN MD FSBC 09/30/15 $32,455 $21,982 $54,437 Tactic 4A: ASEAN MD USDA 12/31/15 $275,730 - $275,730 Tactic 4B: ASEAN MA FSBC 09/30/15 - $2,442 $2,442 Tactic 4C: Caribbean MD FSBC 09/30/15 $20,993 $4,396 $25,389 Tactic 4C: Caribbean MD USDA 12/31/15 $180,475 - $180,475 Tactic 4D: Caribbean MA FSBC 09/30/15 - $488 $488 Tactic 4E: Central America MD FSBC 09/30/15 $45,344 $13,189 $58,533 Tactic 4E: Central America MD USDA 12/31/15 $219,595 - $219,595 Tactic 4F: Central America MA FSBC 09/30/15 $742 $1,465 $2,207 Tactic 4G: China/HK MD FSBC 09/30/15 $61,803 $17,586 $79,389 Tactic 4G: China/HK MD USDA 12/31/15 $346,930 - $346,930 Tactic 4H: China/HK MA FSBC 09/30/15 $1,855 $1,954 $3,809

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Tactic 4I: Europe MD FSBC 09/30/15 $54,375 $21,982 $76,357 Tactic 4I: Europe MD USDA 12/31/15 $400,060 - $400,060 Tactic 4J: Europe MA FSBC 09/30/15 $371 $2,442 $2,813 Tactic 4K: Japan MD FSBC 09/30/15 $463,636 $140,684 $604,320 Tactic 4K: Japan MD USDA 12/31/15 $4,978,290 - $4,978,290 Tactic 4L: Japan MA FSBC 09/30/15 $9,273 $15,632 $24,905 Tactic 4L: Japan MA USDA 12/31/15 $50,000 - $50,000 Tactic 4M: Korea MD FSBC 09/30/15 $154,150 $57,153 $211,303 Tactic 4M: Korea MD USDA 12/31/15 $1,158,115 - $1,158,115 Tactic 4N: Korea MA FSBC 09/30/15 $3,709 $6,350 $10,059 Tactic 4N: Korea MA USDA 12/31/15 $20,000 - $20,000 Tactic 4O: Mexico MD FSBC 09/30/15 $190,406 $57,153 $247,559 Tactic 4O: Mexico MD USDA 12/31/15 $972,650 - $972,650 Tactic 4P: Mexico MA FSBC 09/30/15 $4,636 $6,350 $10,986 Tactic 4Q: Middle East MD FSBC 09/30/15 $90,919 $8,793 $99,712 Tactic 4Q: Middle East MD USDA 12/31/15 $461,220 - $461,220 Tactic 4R: Middle East MA FSBC 09/30/15 $742 $977 $1,719 Tactic 4S: Russia MD FSBC 09/30/15 $23,071 $26,378 $49,449 Tactic 4S: Russia MD USDA 12/31/15 $248,660 - $248,660 Tactic 4T: Russia MA FSBC 09/30/15 $1,113 $2,931 $4,044 Tactic 4U: South America MD FSBC 09/30/15 $31,453 $4,396 $35,849 Tactic 4U: South America MD USDA 12/31/15 $170,450 - $170,450 Tactic 4V: South America MA FSBC 09/30/15 $371 $488 $859 Tactic 4W: Taiwan MD FSBC 09/30/15 $62,480 $65,946 $128,426 Tactic 4W: Taiwan MD USDA 12/31/15 $491,325 - $491,325 Tactic 4X: Taiwan MA FSBC 09/30/15 $3,709 $7,327 $11,036 Tactic 4Y: New Markets FSBC 09/30/15 $13,909 - $13,909

Totals - Strategy 4 $11,245,015 $488,484 $11,733,499* USMEF’s USDA/MAP proposed FY15 beef activity funding is shown. In addition to the totals listed, USMEF may also receive funding from various state beef councils and corn industry groups.

Total Cost Summary for All Funding Sources: (Informational only)Summary by Strategy & Tactic Funding

Source **Completion

DateTotal


Strategy 4: Global Growth Opportunities Tactic 4A: ASEAN MD BPOC/FSBC 09/30/15 $175,000 $118,530 $293,530 Tactic 4A: ASEAN MD USDA 12/31/2015 $275,730 - $275,730 Tactic 4B: ASEAN MA BPOC/FSBC 09/30/15 - $13,170 $13,170 Tactic 4C: Caribbean MD BPOC/FSBC 09/30/15 $113,200 $23,706 $136,906 Tactic 4C: Caribbean MD USDA 12/31/2015 $180,475 - $180,475 Tactic 4D: Caribbean MA BPOC/FSBC 09/30/15 - $2,634 $2,634 Tactic 4E: Central America MD BPOC/FSBC 09/30/15 $244,500 $71,118 $315,618 Tactic 4E: Central America MD USDA 12/31/2015 $219,595 - $219,595 Tactic 4F: Central America MA BPOC/FSBC 09/30/15 $4,000 $7,902 $11,902 Tactic 4G: China/HK MD BPOC/FSBC 09/30/15 $333,250 $94,824 $428,074 Tactic 4G: China/HK MD USDA 12/31/2015 $346,930 - $346,930 Tactic 4H: China/HK MA BPOC/FSBC 09/30/15 $10,000 $10,536 $20,536 Tactic 4I: Europe MD BPOC/FSBC 09/30/15 $293,200 $118,530 $411,730 Tactic 4I: Europe MD USDA 12/31/2015 $400,060 - $400,060

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Tactic 4J: Europe MA BPOC/FSBC 09/30/15 $2,000 $13,170 $15,170 Tactic 4K: Japan MD BPOC/FSBC 09/30/15 $2,500,000 $758,592 $3,258,592 Tactic 4K: Japan MD USDA 12/31/2015 $4,978,290 - $4,978,290 Tactic 4L: Japan MA BPOC/FSBC 09/30/15 $50,000 $84,288 $134,288 Tactic 4L: Japan MA USDA 12/31/15 $50,000 - $50,000 Tactic 4M: Korea MD BPOC/FSBC 09/30/15 $831,200 $308,178 $1,139,378 Tactic 4M: Korea MD USDA 12/31/2015 $1,158,115 - $1,158,115 Tactic 4N: Korea MA BPOC/FSBC 09/30/15 $20,000 $34,242 $54,242 Tactic 4N: Korea MA USDA 12/31/2015 $20,000 - $20,000 Tactic 4O: Mexico MD BPOC/FSBC 09/30/15 $1,026,700 $308,178 $1,334,878 Tactic 4O: Mexico MD USDA 12/31/15 $972,650 - $972,650 Tactic 4P: Mexico MA BPOC/FSBC 09/30/15 $25,000 $34,242 $59,242 Tactic 4Q: Middle East MD BPOC/FSBC 09/30/15 $490,250 $47,412 $537,662 Tactic 4Q: Middle East MD USDA 12/31/15 $461,220 - $461,220 Tactic 4R: Middle East MA BPOC/FSBC 09/30/15 $4,000 $5,268 $9,268 Tactic 4S: Russia MD BPOC/FSBC 09/30/15 $124,400 $142,236 $266,636 Tactic 4S: Russia MD USDA 12/31/15 $248,660 - $248,660 Tactic 4T: Russia MA BPOC/FSBC 09/30/15 $6,000 $15,804 $21,804 Tactic 4U: South America MD BPOC/FSBC 09/30/15 $169,600 $23,706 $193,306 Tactic 4U: South America MD USDA 12/31/15 $170,450 - $170,450 Tactic 4V: South America MA BPOC/FSBC 09/30/15 $2,000 $2,634 $4,634 Tactic 4W: Taiwan MD BPOC/FSBC 09/30/15 $336,900 $355,590 $692,490 Tactic 4W: Taiwan MD USDA 12/31/15 $491,325 - $491,325 Tactic 4X: Taiwan MA BPOC/FSBC 09/30/15 $20,000 $39,510 $59,510 Tactic 4Y: New Markets BPOC/FSBC 09/30/15 $75,000 - $75,000

Total BPOC/FSBC $6,856,200 $2,634,000 $9,490,200Total USDA $9,973,500 - $9,973,500

Totals - Strategy 4 $16,829,700 $2,634,000 $19,463,700** To fund its U.S. beef programs globally, USMEF estimates it will need approximately $20 million in FY15 and is requesting $9,490,200 in beef checkoff funding (direct plus implementation).

V. SUPPLEMENTAL INFORMATION

A. Will all of the work detailed in this AR be completed by the end of the fiscal year? If not, please provide an explanation. The objectives are expected to be achieved, though they are part of longer term strategies which will continue into the next fiscal year.

B. Changes from FY 2014 Approved AR:USMEF continually monitors current market conditions and adjusts strategies as appropriate. When establishing global priorities, USMEF analyzes the marketing environment in each of the primary export markets by considering a variety of factors such as market size (export volume/value), U.S. market share, current and medium-term (3-5 years) market access conditions and competitive environment in each market, penetration of USMEF’s programs, economic conditions, and cost of doing business. This method of analysis provides a useful framework for assessing relative opportunities across different markets and is the starting point for setting global strategic priorities.

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AR #1516-FM

USMEF’s plans for FY15 reflect the following strategic priorities: Japan continues to provide tremendous potential as a result of the 2013 increase in cattle age limits. Korea also remains a priority as the industry strives to enhance the image of U.S. beef and recapture lost market share. Resources will be increased in a) China/Hong Kong to lay the groundwork for anticipated access improvements; b) Taiwan for the continuation of programs to rebuild the image of U.S. beef after negative media reporting; and c) Central & South America as demand for high quality products increases along with competitive advantages stemming from FTAs. Russia remains closed to U.S. beef, so activities will be focused on countries in the greater Russian region.

C. Subcontractor information: Subcontractors are selected using USMEF’s competitive bidding and vendor selection policies and procedures that include bidding contracts greater than $25,000 at least every three years. Selection is based on qualifications and reasonableness of cost. Current contracts over $25,000 are listed below.

Exclamation Graphic POS Production ASEANUsaha Travel Agency ASEANElizabeth Wunderlich Regional Consultant CaribbeanAngie Devorah Ponciano Lavergne Regional Consultant Central America + DRExotic Marketing Group PR Agency Central America + DRStrategos Marketing & logistics agency Central America + DRChina Ag University Research China/HKRachel Deng Foodservice Consultant China/HKFelipe Macias Regional Consultant EuropeMonty Brown Meat Consultant EuropeSauce Communiations PR EuropeT20 Media Online Marketing EuropeTabloid Ltd Internet PR/research EuropeAdecco Staffing Agency JapanAlvis Technical Translation JapanAsatsu-DK Ad/Promotion Agency JapanCookpad Culinary Website JapanDai Nippon Printing JapanDaisho Sauce Maker/Processor JapanDentsu Ad Agency JapanEire Systems IT Support JapanFoodlink Corporation Distributor JapanImage Website Coordinator JapanIPSOS Research Firm JapanJTB Metropolitan Travel Agency JapanKinki Nippon Tourist Travel Agency JapanMoranbong Sauce Manufacturer/Processor JapanNihon Shokken Co., Ltd. Sauce Manufacturer/Processor JapanOffice K2M PR Agency JapanSakaki Lab Publication Development JapanShowa Sangyo Seasoning Manufacturer JapanSP Ring Marketing Agency JapanTokyu Agency Ad Agency JapanTopfield Marketing Research/Publishing JapanCDS-Daymon Worldwide In-store Promotions KoreaCreative May Ad/POS Production KoreaGallup Surveys KoreaGroupM Radio Advertising KoreaHeungseo Industry Co. Booth Constructor KoreaJNF Design Printing Design/Production KoreaKorea Sauce Sauce Manufacturer KoreaSharp Aviation Travel Agency KoreaTae-Pyeong Salt Seasoning Manufacturing KoreaWeber Shandwick PR/Advertising KoreaWithM Retail Promotion/POS Production KoreaYujin Metro Subway Advertising KoreaZestn Cooking Classes KoreaAlberto de Jesus Diaz Cadena Translation MexicoBurson Marsteller Public Relations MexicoEric Vallejo Ramirez Meat Consultant Mexico

30

AR #1516-FMGuillermo Jorge Angeles Arredondo Graphic Design/Production MexicoITESM Meat Training Seminars MexicoJuan Carlos Prieto Williams Media Consulting/PR MexicoLitografia Gil Printing services MexicoMartin Rogelio Ceballos Muñoz Promotional/POS Materials MexicoMedia Design Latinoamericana Marketing Agency MexicoPablo Chavarria Solorio POS Material/Printing MexicoPROCONSA IT Services MexicoPromo Conceptos Promotions MexicoSylvia Basaldua Pohlenz Graphic Design/Production MexicoUniformes de Servicio Corporativo Uniforms, Logo Clothing MexicoYona Marcos Dabbah Faena Promotional/POS Materials MexicoAgri Marketing International Regional Consultant Middle EastArab Marketing & Finance, Inc. Regional Consultant Middle East & Russia RegionJessica Julca Regional Representative South AmericaInterface Comm Media/Publishing TaiwanJWT Marketing Agency TaiwanNew Idea Design POS Production TaiwanWise Consulting Public Relations Taiwan

D. Identify any relationships between this AR and projects previously funded by the Operating Committee: This AR is a continuation of the strategy and tactics currently underway.

E. Summary of Prior Year AR Budgets and Expenses:Summary by

Strategy & Tactic FY 2014 Approved Budgets

Strategy 4: Global Growth Opportunities CBB/BPOC FSBCs Other

(USDA/MAP) Total Direct Cost Impl. Total

Tactic 4A: ASEAN MD $261,098 $62,679 $142,145 $465,922 $301,645 $164,277 $465,922

Tactic 4B: ASEAN MA $15,378 $3,375 - $18,753 - $18,753 $18,753

Tactic 4C: Caribbean MD $105,302 $23,109 $97,945 $226,356 $202,245 $24,111 $226,356

Tactic 4D: Caribbean MA $2,197 $482 - $2,679 - $2,679 $2,679

Tactic 4E: Central America MD $235,942 $51,780 $122,710 $410,432 $362,210 $48,222 $410,432

Tactic 4F: Central America MA $7,674 $1,684 - $9,358 $4,000 $5,358 $9,358

Tactic 4G: China/HK MD $315,348 $69,207 $146,575 $531,130 $410,575 $120,555 $531,130

Tactic 4H: China/HK MA $19,184 $4,211 - $23,395 $10,000 $13,395 $23,395

Tactic 4I: Europe MD $305,417 $67,027 $272,013 $644,457 $548,013 $96,444 $644,457

Tactic 4J: Europe MA $10,427 $2,289 - $12,716 $2,000 $10,716 $12,716

Tactic 4K: Japan MD $2,521,826 $567,071 $2,479,958 $5,568,855 $4,934,958 $633,897 $5,568,855

Tactic 4L: Japan MA $100,318 $22,015 $50,000 $172,333 $100,000 $72,333 $172,333

Tactic 4M: Korea MD $990,932 $237,244 $2,237,250 $3,465,426 $3,089,750 $375,676 $3,465,426

Tactic 4N: Korea MA $67,951 $14,913 $20,000 $102,864 $60,000 $42,864 $102,864

Tactic 4O: Mexico MD $1,077,264 $254,951 $398,580 $1,730,795 $1,378,580 $352,215 $1,730,795

Tactic 4P: Mexico MA $57,554 $12,631 - $70,185 $30,000 $40,185 $70,185

Tactic 4Q: Middle East MD $453,753 $99,580 $269,860 $823,193 $750,860 $72,333 $823,193

Tactic 4R: Middle East MA $9,871 $2,166 - $12,037 $4,000 $8,037 $12,037

Tactic 4S: Russia MD $248,246 $60,659 $120,800 $429,705 $312,300 $117,405 $429,705

Tactic 4T: Russia MA $15,904 $3,491 - $19,395 $6,000 $13,395 $19,395

Tactic 4U: South America MD $152,988 $35,923 $35,290 $224,201 $200,790 $23,411 $224,201

Tactic 4V: South America MA $6,297 $1,382 - $7,679 $5,000 $2,679 $7,679

Tactic 4W: Taiwan MD $519,126 $113,928 $294,290 $927,344 $589,790 $337,554 $927,344

Tactic 4X: Taiwan MA $73,398 $16,108 - $89,506 $52,000 $37,506 $89,506

Tactic 4Y: New Markets $61,503 $13,497 - $75,000 $75,000 - $75,000

Totals - Strategy 4 $7,634,898 $1,741,402 $6,687,416 $16,063,716 $13,429,716 $2,634,000 $16,063,716

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AR #1516-FM

Summary byStrategy & Tactic FY 2014 Actual Expenses (through April 30, 2014)

Strategy 4: Global Growth Opportunities CBB/BPOC FSBCs Other ***

(USDA/MAP) Total Direct Cost Impl. Total

Tactic 4A: ASEAN MD $49,128 $11,520 $60,648 $17,388 $43,260 $60,648

Tactic 4B: ASEAN MA - - - - - -

Tactic 4C: Caribbean MD $5,241 $1,150 $6,391 $4,479 $1,912 $6,391

Tactic 4D: Caribbean MA - - - - - -

Tactic 4E: Central America MD $41,417 $9,092 $50,509 $25,431 $25,078 $50,509

Tactic 4F: Central America MA - - - - - -

Tactic 4G: China/HK MD $83,701 $18,373 $102,074 $19,447 $82,627 $102,074

Tactic 4H: China/HK MA - - - - - -

Tactic 4I: Europe MD $34,941 $7,670 $42,611 $7,938 $34,673 $42,611

Tactic 4J: Europe MA - - - - - -

Tactic 4K: Japan MD $309,836 $68,393 $378,229 $94,566 $283,663 $378,229

Tactic 4L: Japan MA $1,210 $265 $1,475 $1,475 - $1,475

Tactic 4M: Korea MD $243,258 $56,267 $299,525 $139,188 $160,337 $299,525

Tactic 4N: Korea MA $1,314 $288 $1,602 $1,602 - $1,602

Tactic 4O: Mexico MD $352,690 $82,921 $435,611 $271,894 $163,717 $435,611

Tactic 4P: Mexico MA $4,047 $888 $4,935 $4,935 - $4,935

Tactic 4Q: Middle East MD $71,104 $15,604 $86,708 $55,825 $30,883 $86,708

Tactic 4R: Middle East MA $1,973 $433 $2,406 $2,406 - $2,406

Tactic 4S: Russia MD $63,478 $14,090 $77,568 $5,423 $72,145 $77,568

Tactic 4T: Russia MA - - - - - -

Tactic 4U: South America MD $18,859 $4,248 $23,107 $8,391 $14,716 $23,107

Tactic 4V: South America MA - - - - - -

Tactic 4W: Taiwan MD $179,495 $39,401 $218,896 $42,528 $176,368 $218,896

Tactic 4X: Taiwan MA $2,783 $611 $3,394 $3,394 - $3,394

Tactic 4Y: New Markets - - - - - -

Totals - Strategy 4 $1,464,475 $331,214 $1,795,689 $706,310 $1,089,379 $1,795,689*** Due to late budget allocations from USDA and billing cycle lags, expenses through April are low and not reflective of actual activities conducted.

F. Historical Summary of Budgets and Expenses (BPOC/Federation only):

StrategyTotal Approved Budgets Total Actual Expenses

FY 2013 FY 2012 FY 2011 FY 2013 FY 2012 FY 2011

Strategy 4: Global Growth Opportunities $9,337,072 $8,255,500 $7,625,570 $9,325,718 $8,105,337 $7,604,010

AR Totals $9,337,072 $8,255,500 $7,625,570 $9,325,718 $8,105,337 $7,604,010

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