TUCSON, Ariz. — Limited credit availability, volatile currency exchange rates and global economic uncertainty will create an uphill climb for U.S. beef and pork exports in many foreign markets for the remainder of the year.
This was the common theme provided by directors of the U.S. Meat Export Federation’s international offices at the federation’s Strategic Planning Conference in Tucson, Ariz.
Despite these obstacles, however, both products have performed extremely well in 2008, and are well-positioned for continued long-term strength.
Japan is one of the few key trading partners whose economy has fared well in recent weeks, according to Greg Hanes, U.S. Meat Export Federation Japan director.
Hanes noted seafood consumption is trending downward in Japan, and this is creating opportunities for red meat.
The strength of the yen against the U.S. dollar and most other currencies also has enhanced Japan’s appetite for imported products.
Through August, U.S. pork exports to Japan have increased 29 percent in value over the same period last year, while beef exports have increased 64 percent. But the market holds even greater potential if market access can be improved.
According to Hanes, Japan’s gate-price system for imported pork hinders imports to some degree by moderating the current purchasing power of the yen.
But that obstacle is not likely to go away until further progress in made in the Doha round of the World Trade Organization negotiations.
U.S. beef exports are slowed by Japan’s policy that limits imports to U.S. beef from cattle 20 months of age or younger.
Other markets have been much more heavily impacted by economic conditions and the surging value of the U.S. dollar.
South Korea, for example, has had a sluggish economy, and the Korean won has performed poorly in 2008 versus the U.S. dollar.
Still, Korea has increased its imports of U.S. pork by 47 percent in volume and 28 percent in value over last year.
U.S. beef also has re-entered Korea, finding some success among small retail outlets.
Mexico is currently the largest foreign market for U.S. beef and third-largest for U.S. pork, but the recent devaluation of the peso has caused exports to slow from the record-breaking totals reached earlier in the year.
Russia — a rapidly emerging market for both U.S. beef and pork — has also been slammed by the devaluation of its currency as well as a severe drop in oil revenues and other economic issues.
Joel Haggard, U.S. Meat Export Federation senior vice president for the Asia Pacific region, discussed the massive increase in U.S. pork exports that entered China during the first half of 2008, and the reasons behind a recent slowdown.
With regard to China, the slower pace of pork exports appears to be more related to shifts in China’s policy priorities rather than current economic conditions.
“China has started to rebuild its domestic herd, and the numbers suggest they are having success and it is paying off,” Haggard said. “So we’ve seen some slowing of pork moving to China, even though we’ll still achieve record totals for the year.”
Another factor the federation is watching closely, Haggard said, is the food safety problem China has experienced with melamine contamination.
While this issue is not related to U.S. imports, it remains to be seen if it will cause any consumer backlash with regard to livestock-related food products.