Even though the U.S. pork variety meat export market is a bit softer than last year, it’s still a bright spot.
Pork variety meat exports (such as cheeks, feet, heads, organs and more) are down 9.8 percent in volume, but up 3.4 percent in value through the first quarter of 2005. Mexico has become the No. 1 destination for U.S. pork variety meats, with a volume increase of 84 percent compared to 2004 levels.
Overall, the United States exported $275 million in pork variety meats in 2004. This equals almost $2.65 per pig slaughtered, according to Steve Meyer, president of Paragon Economics. That’s $1.40 per head more than in 2003.
U.S. products are cheaper in most overseas markets today because of a weaker U.S. dollar. The exception is China, which is a rapidly growing market for variety meats. In China, pork variety meat shipments are up 650 percent in value and 590 percent in volume so far this year compared to 2004.
For now, China’s currency (Yuan) is fixed at a set level to the U.S. dollar. However, most analysts believe that if China moves to let the financial markets determine the Yuan’s value, Chinese currency would become more valuable relative to the U.S. dollar. That could help the U.S. pork industry because Chinese consumers likely would buy more pork.
“The current policy of pegging the Yuan to the dollar doesn’t allow its value to fluctuate and play a part in balancing trade relationships. It keeps Chinese goods cheap,” says Meyer. “This is a pro-export policy on the part of the Chinese government but our balance of trade with China has gotten way out of hand.”
The U.S. Senate has talked about putting tariffs on Chinese goods to help level the playing field in the trade arena, but nothing has transpired yet.
Other countries that import large quantities of U.S. pork variety meats are Canada, Japan, Taiwan and Korea. Overall, low-priced products, like pork variety meats usually go to consumers with somewhat limited buying power. Packers are doing a better job of matching and packaging meat products, including variety meats, to foreign customers’ demands.
The key point about variety meats is that they provide expansion and growth opportunities for U.S. pork export sales, and consequently for pork producers. (See accompanying chart for value increases by country.)
“With variety meat exports, you take a relatively low-value cut and make a valuable cut out of it,” says Meyer. “That adds value to the pig without driving up the cost of the meats we normally sell in the United States and many other export markets. That bodes well for U.S. consumers, packers and producers.”