December 17, 2004

US Pork Exports to Japan Rise Despite High Import Prices

US pork exports to Japan through October were 11 percent above a year ago. This is despite the Japanese imposition of the Safeguard in August.

The Safeguard is a WTO-legal measure which the Japanese Government can use to protect Japanese hog producers from surges of imported pork products. The Safeguard effectively increases the price of imported pork products by about 25 percent.

Economic factors that could explain higher US exports to Japan, despite higher import prices, include Japan's need to substitute for smaller imported beef and poultry supplies. Japanese restrictions on North American beef imports, and Avian Influenza outbreaks in poultry-exporting Asian countries have been major factors in limiting those imports.

More recently, the lower valued US dollar is a factor frequently cited as most important in driving the US export sector. With respect to Japan, the US dollar has depreciated more than 21 percent against the Japanese yen since 2002. Although Japan remains the largest destination for US pork, its share of US exports has declined from 48.7 percent, to 43.2 percent. Japanese import data also show that US pork products accounted for a smaller percentage of total Japanese pork imports, compared with the same period last year, despite a lower valued US dollar.

The loss of the US market share is due to losses on the frozen side of the market. It is likely that Denmark and other smaller European pork-exporting countries, gained market share from the United States and Canada early in 2004 when the EU temporarily re-instituted export subsidies to "rebalance" the EU market.