From Mexico, with BeefSun, 04/01/2018 - 15:58
Mexico’s top beef producer is ready for any outcome from the renegotiation of NAFTA that could impinge efforts to export to the country’s largest single market, the US. Top beef producer SuKarne says companies need to sail into uncharted waters. It has been doing just that for a long time now. “We understand the importance of the US market but we also know that it is important to be prepared for everything,” says Jesús Vizcarra, President and Director General of SuKarne.
Market diversification has been a central theme across Mexico’s industries since Donald Trump, who has vowed to change the NAFTA agreement, was elected US president in November 2016, specifically targeting trade with Mexico. SuKarne, however, has been ahead of the curve with its strategy to look for other markets. Only 10 years after NAFTA came into effect in 1994, allowing companies like SuKarne to begin exporting and commercializing its production in the US, the Mexican beef producer decided to venture into the Asian market, exporting beef to Japan. Its Units for Integrated Beef Production (UGIs) in Sinaloa, Baja California, Michoacan, the Comarca Lagunera region, Durango and Nicaragua, has allowed SuKarne to develop a strong presence in Angola, Vietnam, Japan, South Korea, Hong Kong and in a number of Central American countries.
Ranked among the top-five beef-packing companies in North America and the third-largest feedlot company in the world, SuKarne has hopes for further expansion. “We are trying to enter the Middle East market with halal meat,” Vizcarra says. According to a SuKarne press release, the halal certification the company already has allows it to access a market with 2 billion consumers. To obtain a halal certification a company must comply with specifications outlined in the Quran regarding the death and consumption of livestock. In Mexico, the National Health Service, Food Safety and Food Quality (SENASICA) plays an important role in the supervision of compliance. That implies having strict control of the livestock, including knowing where it was born or from where it was obtained. This is not a problem for SuKarne. “We have a traceability system that allows us to know our livestock, where it came from and its previous owners,” Vizcarra says.
Such is the interest of the Mexican beef industry to enter the Middle East that a series of commercial missions led by SAGARPA have already taken place, as well as visits from representatives of the United Arab Emirates and Saudi Arabia to Mexican feedlots. According to a Forbes interview with Rogelio Pérez, CEO of Mexican Beef, only six Mexican companies have the halal certification. Pérez is certain that once a deal with Middle Eastern countries is reached, Mexican beef producers will be exporting 20,000 tons of beef yearly, which would account for US$100 million in sales.
Russia, a front that remained closed for four years on Russian allegations that Mexican beef producers were using growth enhancers, has also re-entered the picture. In February 2017, José Calzada, Minister of SAGARPA, announced that Russia would buy 300,000 tons of Mexican beef per year. Then there is the Chinese market. “A number of significant dealings with China are already underway and I believe that agreements can be made,” Vizcarra says. Europe is another likely destination for the country’s beef products. “We are working on obtaining all the needed certifications. It is a process that has taken two years but we are confident that we will be ready to begin exporting to Europe in one more year,” he adds.
Regardless of the political environment in the US, Vizcarra believes that SuKarne’s future is solid and that the company will continue seeing the double-digit growth rates it has enjoyed in the last 20 years. Its business strategy ensures high margins. “We are in an industry with small margins on returns but our integrated model allows us to ensure a higher return.” Diversification will only add to the company’s advantages. “Our first and most important market is Mexico. Nevertheless, we are always in the hunt for new opportunities.”