If the U.S. pork industry is going to sell significantly more pork, it will be in the export market. U.S. consumers have done their part to pick up the pace of pork demand, but even with high-protein diets, there's a lid to their consumption.
The international market, on the other hand, offers tremendous potential. Many markets are under served, and we’ve seen the shift in consumption toward more and better meat when a country increases its per capita income.
While exports offer opportunity, committing to those markets adds some vulnerability to any product. The more dependent an industry becomes on exports, the more risk it carries if those markets close. The Canadian beef industry is one such example, as it had geared up to export 50 percent of its production. Then it was hit with a bovine spongiform encephalopathy case last spring. Worldwide, countries immediately shut off Canadian beef exports. Some experts believe that industry will never fully recover.
The United States’ experience with its single BSE case in December is similar, with 40 countries halting U.S. beef exports, but the impact was less extreme partly because only 10 percent of annual beef production is sold overseas. Still, exports dropped by 97 percent in January alone, for a total impact of $3 billion.
More recently, avian flu has disrupted poultry trade, mostly in and around Asia. Still, the U.S. poultry trade has experienced only a hiccup as it found strains of bird flu in Texas, Delaware and Maryland. The difference is that the strains were not the same as the ones found in Asia that pose a human-health concern. That allowed the acceptance of regionalization, which basically means that countries would accept products from states other than those identified with bird flu. The U.S. poultry industry exports about 15 percent of its annual production.
U.S. pork exports stand at 8 percent of its annual production. The industry has benefited from countries needing to replace beef and poultry exports from various sources. January pork exports were the fourth highest on record. Indications suggest that February sales will be similar.
So far, so good for the U.S. pork industry, as it has not faced the same disease threats as beef and poultry. That doesn’t mean it couldn’t happen. Nor does it mean the type of volatility that export markets present—whether it’s due to disease or human-health concerns, trade issues or politics—is a good reason not to court more export markets. It does mean the industry needs to be aware of the vulnerability it presents, and put programs in place, like herd health monitoring and animal identification, to head off potential problems.