U.S. Pork Export Outlook for 2001 Continues to be Positive

U.S. pork exports for 2001 are forecast at a record 593,000 tons (carcass weight equivalent), up 3 percent from 2000 as exports to traditional markets in Japan and Mexico are expected to remain strong, while developments in Russia and the European Union (EU) are creating further opportunities for U.S. pork exports. Going into 2001, the U.S. pork export environment is characterized by large pork supplies in the United States, projections of reasonable economic growth in key markets, less competitive pressure from the EU, but continued strong competition from Canada.

Key Markets

The three major markets of Japan, Mexico, and Canada all increased purchases of U.S. pork in 2000. According to the most recent U.S. Census data (Jan - Nov), 2000 total U.S. pork exports are up 4 percent from the same period in 1999 with a value of $1.1 billion. Continued strong exports during the final quarter of 2000 will likely persist into 2001.

Japan accounts for about 45 percent of U.S. pork exports and about 60 percent of the total pork export value. Based on November trade data, the most recent figures currently available, exports for 2000 are likely to exceed 1999's level by almost 10 percent. The U.S. pork industry is working in Japan by highlighting a nationwide pork campaign showing the safety and nutritional value of U.S. pork. Since 1998, over 2,000 Japanese retail outlets have conducted promotions under the campaign. The outlook for 2001 is positive as demand for table pork and processed products remain solid, and Korea remains shut out of the market because of foot-and-mouth disease.

Mexico accounts for over 20 percent of U.S. pork exports and 15 percent of the total value. Sales through November have surpassed 1999’s annual total, with year-to-date 2000 exports running about 80 percent above 1999’s record level. As supermarket and hypermart outlets expand, U.S. pork is beginning to reach beyond the retail outlets at the border and processing sector. For example, the leading retail chain in the Yucatan peninsula began selling U.S. pork for the first time after participating in a U.S. Meat Export Federation (USMEF) summergrilling promotion. For 2001, total U.S. pork sales are projected to remain strong as Mexico’s strengthening economy improves consumer income and creates increased demand for pork. In addition, as of January 1, 2001, Mexico’s tariff on U.S. pork products were decreased to 4 percent and quotas increased by 3 percent in accordance with NAFTA. The reduced tariffs and increased quotas on select pork products will make U.S. pork more available to Mexican consumers.

Canada accounts for about 10 percent of U.S. pork exports and 10 percent of the total value. Sales through November are now at a record level, surpassing the previous high set in 1997. Although the pork trade balance favors Canada by over 6-fold, U.S. pork exports to Canada are increasing. Canada is a major U.S. competitor in many markets and recently overtook the United States as the largest pork exporting country in the world.

Additional Opportunities in 2001

For a variety of reasons, U.S. pork exports to Russia, the EU, South America, Korea, Taiwan, Caribbean, Central America, and Hong Kong are lower in 2000. In order to further strengthen U.S. pork exports for 2001, U.S. pork products may be able to regain sales in some of these markets in 2001.
For example, Russia, the world’s third largest pork importing country, is actively looking for potential pork suppliers as the livestock sector continues to decline and supplies from the 1999/2000 food aid packages are depleted. In addition, its major suppliers, China and the EU, are unlikely to be able to meet the growing demand in Russia. Russia banned pork imports earlier this year from China due to foot-and-mouth disease, and the curtailment of the EU’s subsidies on pork cuts make EU pork more expensive. These market developments are likely to benefit U.S. pork exports to Russia in 2001, particularly since the food aid package was successful in introducing U.S. pork to the Russian trade.

The U.S. pork industry is following up with trade shows and educational programs that demonstrate the profitability of less expensive U.S. pork that can be utilized by the processing sector. The Bovine Spongiform Encephalopathy (BSE) situation in the EU may also provide an additional opportunity for U.S. pork exports to third markets, including Russia. Since the onset of the latest BSE crisis in October, beef consumption in France, Germany, and elsewhere has dropped significantly. Consumers are turning away from beef in favor of pork and poultry. Using the 1996 BSE crisis as a guide, intra-EU pork trade will likely rise to satisfy the increased pork demand at the expense of third-country exports. U.S. pork may be able to displace EU pork in some third country markets due to increased pork consumption within the EU, higher EU pork prices, suppression of export refunds on pork cuts, and recent strengthening of the Euro against the dollar. Despite this development, U.S. market share within the EU is not expected to strengthen as the EU has sufficient pork stocks to satisfy internal demand.

US Fresh/Chilled and Cured Hams/Bacon Pork Exports Gain Momentum

For 2000, fresh/chilled and cured hams/bacon cuts lead pork export gains on a year-to-year basis. Year-to-date, exports for fresh/chilled cuts and cured hams/bacon have increased 31 and 8 percent, respectively. The fresh/chilled cuts have already surpassed the annual total for 1999 and are valued at $654 million. In addition, the fresh/chilled export volume is now greater than the frozen cuts. The strengthening Mexican market and continued demand in Japan and Canada are the main contributors to this rise. Year-to-date frozen cuts and prepared/preserved pork products are down 15 and 8 percent, respectively. See attached table for U.S. pork exports by destination and cuts.

US Exports by Destination

DLP Contacts: Tim Rocke 720-7715/ Yoonhee Macke 720-8252/ Allison Thomas 720-7264