U.S. pork producers only have to look south of the border to find the hottest international market for their products as exports to Mexico look to set a record for the fourth consecutive year.
“Mexico is the largest export market for U.S. pork in terms of volume and second in terms of value,” Chad Russell, U.S. Meat Export Federation (USMEF) regional director for Mexico, Central America and the Dominican Republic, said. “Through September of this year, Mexico has taken a third of all U.S. (pork) exports. It’s on target for four consecutive years of record levels of pork exports.”
Since 2011, U.S. pork exports to Mexico have grown an average of 7.1 percent each year, while exports to the rest of the world are down 4.8 percent, Russell said.
“Clearly, Mexico is the engine that is pulling pork trade at the moment,” Russell said.
Russell joined other USMEF officials Thursday in discussing the global outlook for U.S. meat exports during a media conference call at the federation’s Strategic Planning Conference in Tucson, Ariz.
High beef prices have prompted some Mexican consumers to gravitate to pork and poultry in recent years, Russell said.
“Per capita consumption of pork four or five years ago was 14.9 kilos (in Mexico) and today it’s up to 16.7 kilos,” Russell said. “That was one of our key goals four or five years ago was to increase per capita consumption.”
One kilogram equals roughly 2.2 pounds.
Despite measurable gains in Mexico, global pork trade is down, Philip Seng, USMEF president and chief executive officer, said.
“On the commercial side, I have never seen competition as intense as it is right now,” Seng said. “Especially in pork. In China, Korea, Japan, the Philippines, Vietnam and (elsewhere in) Southeast Asia, we’re seeing tremendous influence by the Europeans, and I would say they are here to stay.”
U.S. pork exports thus far are down about 4 percent in volume and 17 percent in value in 2015, USMEF officials said.
“We’re dealing in a marketplace internationally that has been shrinking the last couple of years,” Seng said. “This is a trend that hopefully will reverse itself in 2016. But it’s been a tough year.
“Another characteristic of this year is that the dollar has been strong against all the major trading currencies, and especially the markets that appeal to us,” he said. “So, as their currencies become weaker our currency becomes stronger and it’s just an added tariff, if you will, to our product.”
USMEF officials remain optimistic the recently negotiated Trans-Pacific Partnership (TPP) agreement would help level the playing field in the long term in some key pork markets – if Congress acts quickly to ratify the trade pact in the U.S.
“Almost 42 percent of all U.S. ag exports go to the (12) TPP countries,” Seng said. “By 2030, 60 percent of the world’s middle class will reside in Asia, which has the fastest growing middle class in the world. In Vietnam, the economy has basically doubled since 2007 … so this is the kind of growth envisioned in this TPP block.”
International markets remain of paramount importance to U.S. pork, Seng said.
In addition to the gains Russell outlined for Mexico, pork exports last year experienced double-digit growth in such markets as South Korea, Chile, the Dominican Republic and Taiwan.
Japan also remains one of the strongest markets for U.S. pork. And USMEF officials said China shows tremendous growth potential.
China, with a decrease in its sow inventory, is expected to import a record amount of pork this year, Joel Haggard, USMEF senior vice president for Asia Pacific, said.
When the European Union looks at the United States, it sees a vast market but also a huge competitor, Seng said.
Through improved logistics and forged trade relationships, Europeans are more adept at dealing with some Asian markets, Seng said.
“It seems to me it’s easier for the EU to look East, if you will, and deal with Asia and China,” Seng said.
The dynamics of logistics in the region also have evolved, making it easier for Europeans to ship product to China, he said.
“Our attention should be focused on China long term. … Europeans and everybody are looking at China as the most potential market for growth,” Seng said. “I think the U.S. has a responsibility from a trade relationship … to work out how we can accommodate a working relationship with China, especially on trade.”