FEED Business Worldwide - August 2012
America's surging swine sector
by Eric J. BROOKS
Buoyed by strong export growth, America's swine sector appears set to extend its run as the country's most prosperous red meat line. From 2006 to 2011, per capita consumption fell a steep 10%, from 50.8kg to 45.7kg. Fortunately for pork producers, exports jumped 94.9% over this same time. With shipments to other countries rising from 1.2 million tonnes in 2006 to 2.34 million tonnes in 2011, exports enabled production to rise 10.9% over the five previous years.
Exports slow down, domestic consumption rises At this point, exports are slowing down but domestic consumption is finally growing again. After five recession addled years, the last year has seen per capita consumption rebound, rising 1% to 20.8kg, from 20.6kg in 2011. The USDA projects it to rise an even stronger 2.4% in 2013, to 21.3kg.
While exports are not growing at the torrid pace of the late 2000s, sizeable expansion momentum remains in the pipeline. For the third time in 10 years, the levelling off in pork exports is coinciding with a global economic slowdown, but volumes should resume to a faster growth pace when the world economy recovers.
And having said that, 2011 was an exceptional year for American pork exports, which totalled 2.340 million tonnes and were valued at US$6.11 billion. Moreover, pork exports
share of total US production jumped from its historical average of below 10% to 19% in 2009, 23.7% in 2010, 27.5% in 2011 and 29.5% for the month of January 2012.
April shipments were 5.2% higher than their volume in the same month of 2011 and 4% higher by value. The US Meat Exporters Federation reports that the first four months of 2012 saw pork exports jump 6% in volume and 16% by value, the latter US$2.17 billion figure powered by high international pork prices. Throughout the first four months of the year, exports absorbed 27 - 29% of US swine output.
For January to April, leading export markets of pork and pork variety meat by market share were Mexico, East Asia, Canada and Russia. Leading the shipment parade was Mexico, which saw exports of 207,095 tonnes, up 19% from a year earlier and 18% higher by value. Second place Japan saw a post-tsunami drop in export volumes but they still rose US$700 million by value.
China and Hong Kong took third place but are expected to overtake Japan for the second position within a year. Their combined 154,884 tonnes were up one-third by volume. With China's pork prices near all-time highs and significantly higher than those of the US, the value of exports to China and Hong Kong jumped by 84%.
Partly due to its banning of exports from Brazilian pork processing plants for sanitary reasons, Russia saw its January to April US pork imports rise 20%, to 25,903 tonnes. The only major market to see a marked decline was South Korea. With that country's domestic hog herd recovering from 2011's catastrophic foot-and-mouth disease outbreak, pork exports to South Korea fell 31% to 67,061 tonnes, down from 87,850 tonnes in the first four months of last year.
Going forward, the USDA expects this early year momentum to taper off, with total 2012 exports to rise by 3.6% over 2011 figures, and total 2.43 million tonnes. There are several reasons for this growth slowdown. The EU financial crisis is boosting the US dollar's value, making its pork more expensive just as overseas demand drops.
Second, after suffering record swine prices and an acute pork shortage in the second half of 2011, China's pork output has risen by 4%. Along with China's slowing economy and a new China-Brazil pork trade liberalisation pact, this will result in fewer overall exports to this large market, particularly during the third and fourth quarter.
While these factors level off export over the medium term, considerable momentum remains on the trade front. The US has negotiated a raft of pork liberalisation agreements over the past few decades, and has claimed several recent successes too.
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