Exporting U.S. agricultural goods is critical business, and it’s one of the few U.S. sectors showing record growth. As USDA Secretary Tom Vilsack told the House Agriculture Committee last month, 2011 U.S. agriculture exports are expected to hit $47.5 billion; five years ago it was $5 billion.
Pork exports have mirrored that pattern, and this year U.S. producers are expected to ship a record 22 percent of their production overseas. During March, the latest available data, exports totaled 23.9 percent of production. Add up all of the first quarter and exports claimed nearly 27 percent. What’s more, they contributed $50.79 in per-head value, according to U.S. Meat Export Federation data.
March pork exports set new value and volume records, totaling 490.662 million pounds, up 32.5 percent compared to 2010 and the largest monthly total ever, says Ron Plain, University of Missouri agricultural economist. Sales surpassed $553.6 million in value and jumped 40 percent over year-ago levels.
“The dollar’s weakness is contributing to these huge meat export levels,” Plain notes.
For first quarter 2011, pork exports were 19.2 percent higher than in 2010 and were the largest for any January-to-March period. South Korea, China and Japan were the big buyers.
“We are seeing rebounding global demand for high-quality U.S. meat products,” says Philip Seng, USMEF president and chief executive officer. Even with some lingering obstacles, such as trucking issues and tariffs with Mexico and technical issues in Taiwan, U.S. pork is finding increased opportunities to expand market share. Here’s a detailed look.
South Korea: Leads at 73,905 metric tons (a 212 percent increase), valued at $175.9 million for the first quarter. For March those levels were 41,190 metric tons valued at $94.6 million — more than four times higher than March 2010.
South Korea culled one-third of its swine herd due to its foot-and-mouth disease break and then opened a duty-free tariff rate quota to fill pork demand. U.S. pork is gaining market share (36 percent versus 28 percent in 2010) over international competitors, USMEF notes.
The National Pork Board has allocated $240,000 for USMEF to expand its campaign to promote U.S. pork to South Korean customers. USMEF is seeking additional funds through USDA’s Market Access Program to sustain the program longer term.
Japan: U.S. pork exports maintained a strong pace in March, increasing more than 30 percent in both volume and value; for the first quarter, both were up nearly 25 percent. Following a slight decline last year, U.S. pork has recaptured its 46 percent market share of Japan's pork imports.
Mexico: Still the top volume market for U.S. pork, 2011 had a slow start. Mexico purchased 139,591 metric tons in the first quarter, down 5 percent from 2010. In value terms, sales for the quarter nearly equaled 2010 at $255.4 million, and grew 3.4 percent in March.
High U.S. pork prices have tempered Mexico’s demand, Seng notes, especially with a 5 percent duty on bone-in ham and shoulder cuts because of the lingering North American Free-trade Agreement trucking dispute.
Congress has yet to approve a U.S. Department of Transportation program that would allow Mexican trucks to haul goods into the United States. At a congressional hearing last month, Transportation Secretary Ray LaHood said he believes the final rules could be announced soon.
China/Hong Kong: U.S. pork exports increased 31 percent to 89,043 metric tons ($129 million) in the first quarter. March exports of 32,614 metric tons rose 51 percent from a year ago when China still maintained novel H1N1 influenza restrictions. March values rose 31.4 percent to $47.5 million.
China’s hog prices are reportedly rising, which builds demand for imported pork, Seng notes. U.S. pork totaled 40 percent of China/Hong Kong’s first-quarter imports, up from 16 percent last year.
Australia: First-quarter U.S. exports rose 28 percent to 18,554 metric tons ($58.2 million). March shipments of 9,245 metric tons were up 67 percent in volume and 125 percent in value ($29.2 million) from 2010. The strong Australian dollar is helping U.S. pork sales.
Central/South America: U.S. pork exports to this region have grown 23 percent in volume in the first quarter to 18,834 metric tons ($46 million, up 36 percent in value). March exports totaled 7,706 metric tons, a 48 percent increase ($17.6 million, up 57.6 percent). For the quarter, exports to Chile surged 231 percent to 5,148 metric tons; exports to Honduras and Guatemala each increased 12 percent to 5,922 metric tons and 2,423 metric tons, respectively.
Russia: March exports of U.S. pork doubled year-ago levels, reaching 4,863 metric tons; first-quarter sales at 12,872 metric tons were up 189 percent from 2010’s very low levels. Consequently, export value was up 321 percent ($35.2 million) for the quarter and 237.2 percent ($14.1 million) for March.
While U.S. pork producers rely on exports, those markets don’t come with a guarantee. Certainly politics come into play, as does the global economic climate, product competition and currency values.
Another nagging issue is the lack of a comprehensive livestock traceability system, says Marcine Muldenhauer, who owns the consulting firm MeatLink Management. This has not yet damaged U.S. meat exports but could hurt market share in the future.
However, the process is not well defined. World Trade Organization rules state that countries cannot demand more traceability than what’s in place domestically. “So the rule tends to work in our favor. But as our competitors make gains, they could threaten our export market share,” she says.
Muldenhauer worked with U.S. food-industry representatives to conduct a SWOT analysis for U.S. meat’s international marketability. Here’s what they identified:
Strengths: Reputation for a sound animal-health system; wholesome food-safety system and process; active member of global organizations such as WTO, OIE and CODEX.
Weaknesses: No formal animal identification or tracking system; considerable livestock movement; inconsistent messages and capabilities between industry and government; high traceability costs versus other countries; lacks consistent use of technologies.
Opportunities: Emerging global markets and improving standards of living; United States could provide leadership in traceability standards; the first supplier in a market can establish traceability value; vertical sharing of critical information.
Threats: Competitors’ willingness to meet new market traceability needs; potential for a foreign animal-disease break that is not traceable or controlled quickly.
Without uniform traceability, the United States could lose consumer confidence and its status as a global leader in the meat trade, Muldenhauer says.
“The timeline to catch up with other countries becomes longer as their lead in traceability grows,” she adds. But the real kicker is, “if limited to a domestic market, our meat industry would be significantly constrained.” Ask yourself, what would 22 percent more pork do to the domestic market?