Records create a context of their own. Last year, pork exports surged 49 percent in volume and 50 percent in value compared to 2007, which itself was a record year for U.S. pork shipped abroad. So the prediction by the U.S. Department of Agriculture (USDA) that pork exports in 2009 will likely decline by nine percent isn’t necessarily bad news.
"I think the numbers will go down and I’m all right with that," said Rod Brenneman, chief executive officer of Seaboard Foods and this year’s chairman of the American Meat Institute, in an exclusive interview that appears in this month’s issue of MEAT&POULTRY, "but down nine percent is one thing and down 20 percent or 30 percent is another. Can some of these countries like Russia and China afford to buy like they did in 2008? Right now that’s a big question mark."
According to Erin Daily, the U.S. Meat Export Federation’s manager of research and analysis, "USMEF forecasts for pork exports during 2009 are similar to those of USDA, with the decline in exports likely to approach or exceed 10 percent when compared to record-shattering exports during 2008." Emphasizing context, Daily wrote in an email message to MEATPOULTRY.com: "It is important to keep in mind, however, that 2009 will still almost certainly be the second-highest [emphasis Daily’s] year on record for pork exports. In fact, if projections hold true, 2009 exports will likely exceed 2007 volumes by more than 30 percent. In terms of percent of production, exports will likely still account for more than 20 percent of the pork produced in the U.S., when including variety meats. This compares to nearly 25 percent of production being exported during 2008, but easily exceeds the 16.5 percent exported during 2007."
With hog prices in flux and some major international pork-producing industries experiencing unprecedented downturns (Canada, Denmark), the portion that pork exports adds to carcass value has become particularly important to the U.S. industry. In 2008, approximately a quarter of all the pork produced in the U.S. was exported, according figures presented by Chris Novak, chairman of the National Pork Board, at last week’s Pork Industry Forum held in Dallas, Tex.
Daily noted that while exports increased to all major markets during 2008, the major change in volume came from larger shipments to China/Hong Kong, Russia, Mexico and Japan. "The expected change this year is mainly in exports to China/Hong Kong and Russia," she wrote to MEATPOULTRY.com. "The combination of greater domestic production along with deflated consumer demand is expected to result in slower exports to these destinations. January import data for China and Hong Kong suggests a slight uptick in pork and variety meat imports from the U.S., compared to December imports, and January 2009 imports were nearly unchanged from January 2008, but were smaller than imports during the majority of 2008." In 2008, U.S. pork exports to China benefited from China’s problems with blue-ear disease, which contracted its hog herd by more than 20 million animals, according to some unofficial reports.
In Russia, exports will benefit from a larger U.S.-specific quota (100,000 metric tons compared to 49,800 MT last year). "Last year, however, U.S. pork muscle-cut exports to Russia totaled 150,407 MT, clearly exceeding the tariff-rate quota. The 35-40 percent depreciation of the ruble (since last summer) along with slowing consumer demand will likely limit the ability to pay over-quota duties during 2009," Daily predicted. Quota trigger levels played a big part in the Russian pork market last year, she emphasized. "In-quota exports pay just a 15 percent duty compared to 75 percent (or at least 1.5 euros/kg) for over-quota. During 2008, the over-quota duty was 60 percent, or at least 1 euro/kg. Preliminary Russian customs data also indicate a 60 percent decline in total meat imports into Russia during January, when compared to import value during January of last year."
Elsewhere, Daily sees mostly good news. "U.S. pork exports to Mexico set an all-time record during December, despite the roughly 30 percent depreciation of the peso and gloomy economic situation. Therefore, USMEF remains cautiously optimistic about exports to Mexico during 2009. However, the depreciation of the peso has more than offset the decline in U.S. ham prices, making U.S. products more expensive than last year.
"Looking at Japan’s January 2009 import data, the U.S. accounted for 47percent of Japan’s pork imports, with imports of U.S. pork increasing by nearly 19 percent compared to last year. The yen averaged 90 to one U.S. dollar during January, around 20 percent stronger than last year, but the yen has recently retreated to 98, up just around 10percent compared to last year."
She noted that exchange rates have a "muted impact" on pork exports due to Japan’s gate price/variable levy import system, "but USMEF is optimistic about continued growth in U.S. pork exports to Japan — the largest market for U.S. pork in terms of both value and volume last year."