March 5, 2004

 

 

Mad Cow, Bird Flu Having Little Impact On US Pork Exports

 

Following the outbreak of mad cow disease and bird flu in the United States, many expected pork exports to boom. However, a glut of Canadian pork on the world market and more competition from beef and poultry at home is making it difficult for U.S. pork producers to take advantage of disease-driven opportunities in other countries, experts said Thursday at a national pork industry meeting in Atlanta.

 

"I haven't heard any producers say they're planning to increase the number of hogs they're producing," said Nick Giordano, international trade counsel for the National Pork Producers Council. "The average hog producer has lost money for 22 of the last 26 months, so times are not good."

 

Because of international bans, more U.S. beef and poultry must be consumed domestically, driving down meat prices overall and leading to more competition for the pork industry within the United States, Giordano said.

 

Compounding the problem is an oversupply of Canadian pork on the world market. International bans on Canadian beef because of mad cow disease led to the pork surplus. As Canadian consumers purchased more beef because of reduced prices resulting from the disease scare, Canada's domestic pork consumption dropped. The extra pork was than marketed to other countries.

 

Because the Canadian government directly subsidizes its hog farmers there was no incentive to curb production, Giordano said.

 

"We were shocked that they weren't cutting back production," Giordano said. "The risk premium's different. When you're indemnified for losses to some extent, you're not responding to economic signals, like hog producers in the U.S. are."

 

Giordano said Canada's "unusual behavior" is impacting the effectiveness of the North American Free Trade Agreement and "putting some of the most efficient producers in the world out of business."

 

Depending on how the bans pan out, pork producers could capitalize on higher demand in other countries. Glenn Grimes, a University of Missouri-Columbia livestock marketing economist, said U.S. poultry bans have a greater effect on the pork industry because pork marketers have pushed their product as a healthy alternative to chicken, frequently referring to it as "the other white meat" in advertisements.

 

The more poultry poured into the U.S. market because of international bans, the more competition the U.S. pork industry faces at home for the "white meat" dollar.

 

"Let's hope spring gets here and the bird flu gets over with," Grimes said.

 

Grimes said export data are not compiled for two or three months, so it will not be until May before pork producers can quantify how the diseases have affected their international demand. The lag in data makes it difficult to respond to the market, he said.

 

A United Nations report issued Tuesday states that beef and poultry bans would likely spark increased pork imports in the banning countries. It cited as evidence a 40-percent surge in pork prices in Japan, which has bans on North American and Asian beef and poultry.

 

Giordano insists, however, that the bans will merely increase U.S. supply and drive down prices.

 

"I don't anticipate it fueling expansion in the pork industry," he said.

 

The United States exported 1.67 billion pounds of pork last year worth $1.58 billion. It also exported 2.58 billion pounds of beef and 4.9 billion pounds of chicken.