As the war in Iraq appears to be winding down (at the time of this writing), there are still many international developments to consider. Pork exports may seem trivial compared to discussions about war, but commerce and financial viability are significant parts of a stable global environment.
Since most Middle Eastern countries eat little to no pork, due to religious reasons, the direct impact of Operation Iraqi Freedom on U.S. pork exports has been minimal. The indirect effects could still affect pork exports, however.
“From a global standpoint, international disruptions can affect exports,” says Lynn Heinze, vice president of the U.S. Meat Export Federation. “As far as the Middle East, we aren’t concerned about losing meat exports due to the war.”
Due to the war’s swift nature, global trade disruptions look to be minimal or non-existent. “The war’s duration is the primary factor in the impact it could have on pork exports,” says Heinze. “Long-term pessimism or an economic slowdown as a result of the war, could have an impact.”
“The only impacts I could see are: 1) higher transportation costs, due to more expensive oil, or 2) a resulting terrorist attack, neither of which seem likely,” says John Lawrence, Iowa State University agricultural economist.
The United States’ action against Iraq has drawn a lot of attention around the world, not all positive. France, Germany and Russia have been the biggest critics. Consumers in those countries have boycotted U.S. products – just as some Americans have done in return. However, those countries are not major markets for U.S. pork exports.
Domestic meat demand is not expected to show much effect from the war either. However, domestic economic health will influence purchases.
“The war could affect the value of the U.S. dollar, which might not impact demand, but could impact the flow of trade,” says Heinze. This would take longer to unfold, but so far the signs appear positive.
There are many challenges facing pork exports this year, but it appears that ramifications from the war with Iraq will not be chief among them.
“Quite frankly, what’s hurt trade are a variety of sanitary and political issues,” says Heinze. “There is an anti-dumping case in Mexico, and Russia recently enacted some interesting regulations on pork imports. The United States still thinks it can do a good job getting pork to Russia, but the new regulations are sending some mixed signals.”
SARS Virus Could Hamper Exports
Activities in one part of the world can impact trade and commerce in another. The new respiratory disease known as severe acute respiratory syndrome has caused great uncertainty.
While the cause of SARS remained a mystery for a time, researchers did determine that new a form of coronavirus is the culprit. World Health Organization researchers say that it definitely comes from animals.
China is the area most seriously affected with SARS, followed by Hong Kong – the world’s largest shipping port. SARS cases have been reported in 21 countries, primarily in Asia.
It’s not yet clear how fears over SARS may affect pork exports. Some of it depends on whether shipping and travel to Asia continues or halts. It has made people skeptical about business and personal travel. An extended downturn in travel could in-turn affect pork consumption. Many restaurants in SARS-affected countries are reportedly setting empty and closing down.
“The concern really is what happens in hotels and upscale restaurants,” says James Mintert, Kansas State University agricultural economist. “In the fall of 2001 hotel and restaurant business declined due to 9-11 and the same thing could happen with SARS.”
While a decrease in hotel and upscale restaurant business isn’t good for anyone, beef would take the major hit. On the other hand, that forces more beef into retail outlets, providing stiffer and cheaper competition for pork.
“So far we haven’t seen much spillover to say that demand is weakening,” says Mintert.