Although the latest U.S. pork export results show a slight jump in shipments to Japan in May, U.S. Meat Export Federation (USMEF) economist Erin Borror said January-May exports to Japan were still below last year’s pace. She attributes this to a decline in U.S. shipments of ground seasoned pork – a product Japanese processors use as an ingredient to make sausage.
Pork exports to Japan, the leading value destination for U.S. pork, have been trending lower through the first four months of the year, but May pork exports to Japan increased 5% from a year ago to 36,373 metric tons, the Weekly USMEF audio report said. Meanwhile, export value ($148.6 million, up 3%) was the highest in 18 months.
“We were encouraged to see bigger U.S. exports of pork to Japan and especially in the chill category, as chilled volumes are holding roughly steady with year ago,” Borror said. “What we're most concerned about is the category of ground seasoned pork. It’s high-value product, but it's used as a raw material for input into Japan’s sausage making. So it’s extremely price-driven and price-competitive.”
U.S. ground seasoned pork faces a 20% duty rate in Japan, while competitors such as the European Union, Canada and Chile pay 13.3% due to recent trade agreements. For the first five months of this year, Japan’s imports of U.S. ground seasoned pork fell by $46 million year-over-year and U.S. market share dropped from 67% to 57%. In the past, U.S. was the dominant supplier with over 70% share.
“U.S. pork producers are losing market share in Japan to international competitors that have recently negotiated more favorable trade terms in our most valuable market,” David Herring, NPPC’s president and a pork producer from Lillington, N.C. said in a press release in April. “We are already seeing a decline in sales to Japan and will see market loss accelerate if we don’t quickly secure competitive access to Japan.”
On a positive note, Japan’s tariff reductions have helped fuel an increase in pork imports and pork consumption. Borror sees outstanding opportunities if the U.S. can secure a trade agreement with Japan.
“Japan is reducing and eliminating tariffs on all processed pork products,” she said. “And so big opportunities, this gets really exciting if we think about the U.S. having the same market access terms as our competitors. We can imagine Japan buying more and more of these value-added, processed products that have been mostly produced in Japan because of high tariffs that have kept the Japanese market limited to mostly imports of chilled, frozen and ground seasoned pork.”
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