The U.S. pork industry has reason to celebrate after the August export stats came out with some good news for pork. August exports topped year-ago totals for the first time in 2022, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).
USMEF CEO and president Dan Halstrom says they expected to see volume start to rebound in the last part of the year. But he won’t deny the numbers are even better than he expected.
With all the headwinds the industry continues to face in the second half of 2022, Halstrom says it makes the export numbers that much more impressive in his mind.
What Stands Out?
Although it’s been a story all year long, Mexico continues to be a bright spot for U.S. pork exports. In addition, Halstrom says there’s some significant growth out of a few other countries that we haven’t seen for a while.
“China was up significantly, led primarily by the variety meats side, which is good news,” Halstrom says. “We always like to move those variety meats, especially with the premium we get on the value side.”
So, what’s driving the change in China? Halstrom attributes increasing live hog prices and a rebound in demand and consumption.
“It’s a little hard to gauge to just what extent, but if you look at the supply and demand tables that we keep, we’ve been estimating there would probably be a deficit supply-wise to some extent, nothing like it was in 2020,” he says. “But compared to where we’ve been since then, we estimated there would be increased demand at the last part of the year. It’s probably a combination of several things but it’s encouraging to see it finally show up in the numbers.”
In addition, Philippines was up on the pork side. Korea was up substantially, too, which was a bit of a surprise given the fact that some of U.S. pork’s competitors recently gained zero-duty access. Korea opened a duty-free quota for imported pork in June, which mainly benefited Canadian, Mexican and Brazilian pork. Imports from the U.S., Europe and Chile already have zero-duty access through trade agreements.
What’s Behind the Growth?
First and foremost, Halstrom says we have a strong U.S. dollar against some key currencies like the Japanese yen, the Korean won, and even against the Chinese currency.
“Interestingly enough, the one market where it’s been relatively not impacted is Mexico. The Mexican peso is pretty steady and hasn’t seen a big devaluation, which is good news, because we’re seeing some very large volumes going there,” Halstrom says.
Meanwhile in Asia, the dollar is strong. Supply chain logistics are improving some, but are still an issue, he explains. Chilled products going into Japan and even Korea have been a challenge. Labor continues to be short in the food service segment.
“COVID continues to be a concern in China. Though the protocols may be relaxing a bit, there are still some concerns. Having just been in Japan, everyone’s masked up indoors and outdoors. Despite all that, demand continues to be extremely resilient and we have loyal buyers in some of these markets, even with all the headwinds,” he says.
Relationships Pay
Speaking of loyal buyers, Halstrom says this is where USMEF and its partners shine.
“You could argue when things are all rosy and the winds are all in your favor, it makes it a bit easier,” Halstrom says. “It’s in these tough times where the work that USMEF and our partners do, really pays off.”
He says they can get more aggressive on promotions, tasting demos, educational seminars and social media interaction.
“If we can take it up a notch or two and increase the visibility of U.S. products around the world, it’s a help to the importers, distributors, retailers and the food service companies that use our products in these foreign markets,” Halstrom says.
He recently met with seven leading Japanese importers. While loyal customers of U.S. red meat, Halstrom said they are frustrated by logistical obstacles and economic headwinds that make the current business climate very challenging.
“We’re really working to help these folks. It won’t stay like this forever, these markets ebb and flow, but during these tough times, this is where we can really help out our partners,” Halstrom says.
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