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Trade Barriers, Soft Demand Keep April Beef, Pork Exports Sluggish

07 June 2013

US - April exports of US beef and pork edged higher than the previous month but still lagged behind year-ago levels, according to statistics released by USDA and compiled by the US Meat Export Federation (USMEF).

While the overall trend for exports remains sluggish, driven by market access issues and oversupply of domestic product in key markets, several leading trading partners showed positive signs in April.

Beef exports to Japan were up sharply as the island nation regained its ranking as the No. 1 market for US beef for the first time since 2003. At the same time, Hong Kong maintained its rapid growth pace and Taiwan continued its rebound from beta agonist-related issues that slowed exports last year.

While the boost in exports to Japan is encouraging – up 49 per cent in volume and 44 per cent in value versus the first four months of 2012 – USMEF President and CEO Philip Seng cautioned that Japan has a safeguard in place that will increase tariffs if beef import volumes rise too quickly. This safeguard, which was utilized by Japan in 2003 under similar circumstances, remains an important consideration for US exporters and Japanese importers.

On the pork side, Mexico showed double-digit growth in April after a slow start to the year while Central/South America, the ASEAN region and the Caribbean all grew 30 per cent or more for the month. US lamb sales were also up sharply to leading export markets.

Summary of April results

April beef export volume of 86,433 metric tons (mt) was down 9 per cent from a year ago and export value was down 7 per cent to $434.8 million. For January through April, beef exports were 2 per cent higher in value ($1.75 billion) despite a 5 per cent decline in volume (343,020 mt).

April pork exports totaled 174,073 mt valued at $475.1 million – down 5 per cent and 7 per cent, respectively, from a year ago. Through the first four months of the year, pork exports were 10 per cent below last year’s pace in both volume (702,268 mt) and value ($1.96 billion).

Russia’s suspension of imports of US beef and pork, which officially closed the market 11 February, continues to hamper overall performance. USMEF estimates this trade impasse, which is related to Russia’s enforcement of a zero-tolerance policy for beta agonist use, has cost the US industry about $97 million in beef export value and $58 million in pork export value so far in 2013.

“Along with our lack of access to sell beef in mainland China, this is the biggest barrier we face in terms of market access,” said Mr Seng. “One often overlooked factor is the effect this suspension has on the price US products command in markets other than Russia. For example, beef livers to Egypt have increased in volume, but the value is down. There is also downward pressure on the prices offered for rounds, hams and pork for further processing. The impact is much broader than many analysts realize at first glance.”

Through April, beef exports equated to 9 per cent of US muscle cut production and 12 per cent including variety meat – down from last year’s ratios of 9.6 per cent and 12.7 per cent. Export value equated to $217.54 per head of fed slaughter, up 3 per cent from the same period last year.

Pork exports accounted for 21 per cent of muscle cut production and 25.3 per cent including variety meat. This is down from 24.6 per cent and 28 per cent, respectively, during the first four months of 2012. Export value for the first four months of 2013 equated to $52.72 per head slaughtered, down from last year’s pace of $58.84.

Japan regains No. 1 ranking among beef export destinations

The US beef industry continues to capitalize on its recently expanded access to Japan. With April exports more than doubling last year’s performance, exports to Japan moved 49 per cent higher in volume (59,969 mt) and 44 per cent higher in value ($382.3 million) for the year. This made Japan the leading destination for US beef in both volume and value, overtaking Canada.

“Many observers felt USMEF’s growth projections for Japan were overly bullish,” Mr Seng said. “But we were keenly aware of the unmet demand from existing buyers and the opportunities to secure new business once we had a wider supply available. This shows once again the importance of having experienced staff on the ground who know how to direct marketing resources in a way that will maximize results.”

US beef exports to Canada slowed in April, though volume (55,485 mt, +10 per cent) and value ($355,321, +15 per cent) remained higher for the year. Exports to Hong Kong, which also recently expanded access for US beef to include bone-in cuts and some products from cattle over 30 months of age, soared by 87 per cent in volume (27,965 mt) and 79 per cent in value ($158.6 million) in the first four months of the year. Taiwan also continues to perform extremely well in 2013, with exports beating last year’s pace by 84 per cent in volume (10,841 mt) and 129 per cent in value ($84.6 million). While exports to Taiwan slowed in 2011 and 2012 due to an impasse over beta agonists, this year’s January-April exports exceed the pace achieved when this market was performing at its peak.

In addition to the Russia closure, beef exports were hampered by slow demand in Mexico and South Korea. In the case of Mexico, the price point relative to other competing proteins continues to be an issue that has proven difficult to overcome as exports declined 22 per cent in volume (56,766 mt) and 25 per cent in value ($242.7 million) compared to a year ago. In Korea, the main issue is an oversupply of domestic protein, which has created a difficult climate for imported products. Exports to Korea were down 20 per cent in volume (37,886 mt) and 9 per cent in value ($199.7 million). Exports also slumped to the ASEAN region due to weak demand in Vietnam and ongoing trade barriers in Indonesia. This was partially offset by a strong performance in the Philippines, where exports were up 16 per cent in volume (4,730 mt) and 35 per cent in value ($21.3 million).

Pork exports to Mexico show signs of recovery; South America very strong

While January-April pork exports to Mexico were down 8 per cent in both volume (190,464 mt) and value ($345.7 million) compared to last year, April proved to be a very strong month as volume (52,958 mt) increased 19 per cent and value ($92.9 million) was up 20 per cent. Other markets in the Western Hemisphere also performed extremely well in the first four months of 2013, including:

  • Canada, where exports were up 4 per cent in volume (74,817 mt) and 3 per cent in value ($265 million) over last year’s record pace.
  • Improved market access resulting from the recent free trade agreement helped push exports to Colombia significantly higher in both volume (7,823 mt, +71 per cent) and value ($20.3 million, +56 per cent), making it the leading destination in the Central/South America region.
  • Exports to Chile continued to expand, increasing 28 per cent in volume (7,349 mt) and 33 per cent in value ($19.6 million).
  • In the Dominican Republic, exports climbed 18 per cent in volume (5,556 mt) and 22 per cent in value ($12.9 million). Variety meat exports to the Dominican Republic actually declined, so this performance was driven by impressive growth in muscle cut demand.

“It is gratifying to see US pork performing so well in our neighboring markets, and the April recovery in Mexico was especially critical,” Mr Seng said. “The strong results in Mexico and Canada really underscore the importance of resolving our issues with country-of-origin labeling so that our exports don’t face retaliatory measures from these trading partners.”

Led by strong results in the Philippines, exports to the ASEAN region were up 41 per cent in volume (20,781 mt) and 32 per cent in value ($51 million). Exports to Taiwan were much improved in April, nearly tripling in volume and value from a year ago. This pushed Taiwan’s January-April totals ahead of last year’s pace by 2 per cent in volume (7,136 mt) and 3 per cent in value ($16 million).

Coming off a $2 billion performance last year, pork exports to Japan have struggled to maintain this pace in 2013. Through April, exports were down 12 per cent in volume (143,264 mt) and 9 per cent in value ($637 million). According to the Global Trade Atlas, Japan’s imports from all sources were down 3 per cent in volume (311,548 mt) and 16 per cent in value ($1.62 billion), with value declining for the market's four leading suppliers: the US, Canada, Demark and Mexico.

January-April exports to the China/Hong Kong region were lower in both volume (135,300 mt, -13 per cent) and value ($287 million, -8 per cent), but this is mostly a reflection of low domestic prices, which have begun to stabilize in recent weeks. Exports to Korea were down for similar reasons, declining 35 per cent in volume (43,613 mt) and 38 per cent in value ($119.1 million).

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