Sizing up beef, pork imports

by Bryan Salvage
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KANSAS CITY – During 2011, the major US meat import trend was the decline in the amount of beef imported, particularly from Australia where imports were the lowest they have been in more than 40 years, said Laurie Bryant, executive director, Meat Import Council of America Inc., Reston, Va.

Beef imports from Australia to the US in 2010 totaled $725,020,000 in value and 188,155 metric tons in quantity. From January to October 2011, the totals were $595,798,000 and 124,469 metric tons, respectively. Comparing the same 10 month periods in 2010 and 2011 shows a decline in volume of 26 percent.

Beef imports had already declined by 29 percent in 2010, which itself was the second-lowest in the same period with only 1996 recording a lower volume of beef imports than 2010.

Beef imports from Canada to the US in 2010 totaled $945,424,000 in value and 294,973 metric tons in quantity. From January through October 2011, the totals were $742,912,000 and 199,141 metric tons, respectively. As a result, Canadian beef imports declined sharply, running in the first 10 months of 2011 some 23 percent below the same period in 2010 and the lowest since 1995. And Uruguay fresh and frozen imports to the US from January to October 2011 — which totaled $52,123,000 in value and 8,995 metric tons in quantity — were down 31 percent on sharply reduced volume in 2010.

Imports from Mexico (January-October 2011, which totaled $264,984,000 in value and 47,669 metric tons in quantity) and Central America, were up by 52 and 28 percent, respectively, with Mexico at record levels and the fourth-largest supplier this year just above Nicaragua, while Central America is recording the highest volume since 1994.

“Several factors have contributed to the dramatic shift in the volume of imports, despite record high US beef prices.” Bryant says. “The returns on exports to the US, when expressed in the currency of supplying countries, have been reduced by the weak US dollar and this coupled with increased demand in emerging markets, particularly Russia, Asia and Europe, has meant better returns can be achieved elsewhere. As a result, these markets have been much more attractive to exporting countries.”

The Southern Hemisphere countries that are traditional suppliers to the US have also taken advantage of the decline in beef exports out of Argentina and Brazil, countries that are not currently permitted to export fresh and frozen beef to the US, he adds.

Some regulatory requirements discourage exporting to the US because of the increased costs and risk they create. In particular, the lotting controls that have to be employed when loading containers following the introduction of random testing for E. coli O157:H7 when product is imported is a major deterrent. Overseas suppliers will supply other markets where these issues don’t arise unless there is a significant price advantage in the US.

Frozen beef is the main meat item imported to the US from the main supplying countries. The exception is Canada and Mexico, which because they are contiguous to the US, can be looked on as part of an integrated North American market with product flowing back and forth across the border much as it does between states.

Excluding Canada and Mexico, most frozen beef imported to the US is raw material for producing hamburgers, hot dogs and other processed meat items, providing the lean beef to be mixed with domestic fat trimmings. There is a deficit of lean beef for grinding produced in the US, which increases during the herd-rebuilding phase of the cattle cycle and is also impacted by the increased productivity of breeding cows and the declining trend in cattle numbers as beef supplies are maintained by increasing carcass weights. Frozen product also provides benefits in the grinding process as it counteracts the heat that is created when grinding, helping to maintain the cold chain in the production of hamburgers.

Fresh beef imports from these same suppliers are a much smaller part of the trade and are destined in the main for specialist uses including mid-level restaurants, as well as helping to meet the demand of niche markets, such as grass-fed and organic.

The outlook for beef imports in 2012 remains clouded, but the expectation is there will be some increase in beef imports. Factors likely to be positive for imports are:

  • A decline in production of lean manufacturing beef in the US as the culling of cows from drought impact regions is expected to come to an end.
  • Increasing beef prices, in general, as domestic supplies are expected to decline as the year progresses.
  • Further increases in US exports during 2012 are expected, with the prospect of a change in requirements for Japan to allow beef to be sourced from cattle under 30 months of age likely to provide a boost for exports to Japan.

Other less-clear factors are signs that demand in other markets may be impacted by the problems in Europe — plus the strength of the US dollar, which would make the US much more attractive if it strengthens against other currencies.

The primary negative factor that will have an impact on supplies, if implemented, is the proposed rule relating to the declaration of non-STECs to be adulterants and the associated testing regime. This will further increase the cost and risk associated with supplying the US market.

Pork imports
All pork imports to the US from January-October 2011 totaled 236,863.80 metric tons (mt) vs. 262,798.40 mt during the same one year earlier period. More than 80 percent of US pork imports are from Canada, which is also the third-largest export destination for US pork exports, Bryant says. Consequently, the same comments applies as for beef — it is all part of a North American integrated market with volumes determined by opportunities in other markets and the relative exchange rates being a significant factor in trade flows. Denmark is the next-largest market and most of that product would be frozen ribs.

“The only US pork import factor that will change the flows this year will be access for the Brazilian State of Santa Catarina, but I do not expect the volumes to be large and should not impact current trends,” Bryant said.

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