Shipments just sitting at sea and containers piling up at ports; all signs of challenges the export business has faced.
“We need to continue to make sure those bottlenecks are slowly eliminated over time. It gives us an opportunity to move more product outside of the U.S.,” says Scott Brown, a livestock economist with the University of Missouri.
David Newman is a pork producer in south central Missouri, and he’s seeing first-hand how essential export demand is to the pork industry.
“You could talk about the challenges of the high cost of diesel, the high cost of feed and the outlook on feed, or you can look at this half full and look at demand, because demand is amazing,” says Newman.
April Data Shows Slow Pace
The U.S. Meat Export Federation (USEMF) says USDA’s most recent export data shows April pork exports were down 21% from last year’s large number. Export value was down 20% during that same time.
The biggest turbulence for pork exports has been China with exports during the first quarter of this year off 56% compared to a year ago.
“We knew that it was going to be a temporary surge, and we had that forecast, but still not to the degree that imports did actually decline,” says Erin Borrow, an economist and VP of Economic Analysis with USMEF.
Borrow says USMEF knew shipments to China would be down due to a number of ongoing hurdles, including lingering impacts of the COVID-19 pandemic.
“They’ve been testing, disinfecting and tracing imported food products, including our frozen pork and pork variety meats,” explains Borrow. “That has added costs going all the way back even into kind of mid-2020.”
The other issue is the hangover effect from the pork export surge due to African swine fever (ASF) in China.
“I’m not sure we get back to where we would have been in 2020, in the heyday of a lot of trades of China,” says Brown. “However, I think we get recovered, and it’ll just be perhaps more muted as we go forward.”
Export Picture Shows Promise
USMEF says China/Hong Kong is still a dominant destination for U.S. pork, even with the zero-COVID policy that shuttered streets in Shanghai and put the area into severe lockdowns. However, those restrictions started to ease last week.
“We think that imports will rebound. We think that China’s pork imports have probably bottomed as we speak,” says Borrow.
With the country possibly opening back up for business, it’s also painting more optimism for exports overall.
“We also think that total U.S. exports trend above a year ago for the second half of the year,” says Borrow. “Some of that is China coming back, but some of that is continued growth into Mexico, the Dominican Republic and into central America. And those were some of the big growth markets, which we anticipated because you had some pent-up demand.”
Exports to Mexico Still on Record Pace
One country hungry for more U.S. pork is Mexico. Exports to Mexico have been on fire this year, up 24% in March. The latest data from April shows shipments to Mexico remain on a record pace.
“Thank goodness we’ve seen the growth that we have in the first few months of 2022 to Mexico, otherwise we’d be in a much tougher situation,” says Brown.
Diversifying Demand in South America
Newman recently traveled to Peru and Dubai. He says globally, the opportunity for U.S. pork is remarkable.
“There is tremendous opportunity in south America and really just heading south in general,” says Newman. “Mexico is a tremendous opportunity. Been a flagship market for us for years. The Dominican Republic, Chile, Peru and Colombia, all those markets are hungry for U.S. products.”
“Colombia’s production had been growing, but they just haven’t been able to keep pace with consumption growth,” adds Borrow. “That’s a great story where your domestic industry is still growing, but you still need imports to meet that demand.”
Another market revealing growth is the Dominican Republican. Hit with African swine fever last year, the Dominican Republic purchased 94% more U.S. pork in April.
“They need the imported product,” says Borrow. “It was already a growing market, again, another free trade agreement country. And so, they continue to demand more U.S. pork.”
Looking ahead, Newman says diversifying demand for U.S. pork is essential.
“We’re still seeing a huge value market, not only in Japan, Mexico and those markets, but then also the opportunity we have in new and emerging markets down in south America. Those are going to be mainstays. We’re going to be able to plant a flag in that, and those will be markets we’re talking about even in 2040.”
As USMEF not only pushes for more trade agreements that remove tariff and non-tariff barriers, they’re also untapping the taste potential and other benefits of pork in emerging markets.
“We’re able to reach this consumer digitally,” says Borrow. “And so, they’ve done health education. Pork in the region has some misperceptions about health, for example. So, educating on the healthy attributes, and even engaging consumers in challenges and health related challenges, and then educating on the barbecue related concept.”
Growing Appetites Around the Globe
Growing appetites one country at a time is why the pork industry thinks the remainder of 2022 is looking up.
“If things maintain where they’re at, consumer spending power stays high and we can hold on to these markets, we will all fare very well in 2022 and into 2023, as well,” says Newman.
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