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Pork Exports Jump Amid Domestic Supply Issues

As South Korea, Japan and Russia cope with challenges to their domestic pork supply, U.S. pork exports have risen sharply in 2011.

In Korea, the massive slaughter of livestock caused by the foot-and-mouth disease (FMD) epidemic has dramatically reduced the meat supply across the country and resulted in higher prices. Japan is, of course, dealing with its own supply problems in the aftermath of the March 11 earthquake and tsunami, but growth in the market was already well underway in the January-February pre-crisis period. Meanwhile, in Russia, the spread of African swine fever and high prices for feedstock are keeping pork production flat despite major investments in the industry.

South Korea Leads
The growth leader for U.S. pork exports in February was South Korea, which purchased a record 19,532 metric tons (21,485 tons) valued at $49.2 million. Monthly export totals to Korea jumped 154% in volume and 227% in value vs. February 2010. In those first two months, South Korea purchased 32,715 metric tons (35,987 tons) of U.S. pork valued at $81.3 million – increases of 143% and 198%, respectively.

In an effort to stabilize food prices and cope with inflation, the South Korean Ministry of Strategy and Finance on March 7 implemented temporary duty reductions on a list of tariff-rate quota (TRQ) items, including frozen pork belly. The volume of pork belly exempt from import duties was expanded from 10,000 tons to 60,000 tons. The expanded TRQ will be enforced through the end of June. Korea imported 191,133 metric tons (21,025 tons) of frozen pork belly in 2010, 35% of which was from the United States.

More importantly, the U.S. Meat Export Federation (USMEF) was seeing signs of pork export growth to Korea late in 2010, before FMD was found. Exports to Korea had been forecast to rise 5%, driven by improving economic conditions, but the FMD situation and changing consumption patterns could bolster imports by 30% to 40% (as much as 150,000 tons).

Higher domestic prices in South Korea should make U.S. pork more attractive, and the temporarily reduced tariff on frozen pork is expected to benefit U.S. exporters despite tight supplies.

Japan Still the Leading Value Market
In Japan, the leading value market for U.S. pork, exports were up 19% in volume (74,498 metric tons or 81,948 tons) and 17% in value ($280.3 million) for the first two months of 2011. In addition, Japanese import data show the U.S. market share increased to 45.5% of all imported pork, up from 43.2% a year ago.

The increase in exports to Japan during the pre-crisis period is encouraging and USMEF forecasts that pork exports should remain on track for the remainder of 2011, despite the turmoil. USMEF’s Japan office is continuing with the vast majority of its scheduled programs and is actively engaged in relief efforts. Thus far, the federation has collected nearly $500,000 to help supply meals to those affected by the disaster.

The Japan Disaster Relief Effort is designed to engage a broad range of the U.S. agricultural community in providing support for Japanese citizens affected by the devastating March 11 natural disaster. U.S. pork producers and exporters, through the National Pork Board (NPB), immediately stepped forward with an allocation of $100,000 from the Pork Checkoff to purchase pork products for distribution. The U.S. pork industry is responsible for a major portion of the funds already collected. In addition to the Pork Board contribution, $50,000 was pledged by the Minnesota Pork Board, $25,000 from the National Pork Producers Council, $10,000 from Indiana Pork, and $1,000 from the Kentucky Pork Producers Association. And, individual producers have made contributions ranging from $100 to $250. USMEF, through its Tokyo office, is working with Japanese processors and distributors to ensure that the product reaches consumers in need.

Russian Pork Buys Jump
In Russia, U.S. pork exports in January and February shot up by 312% (6,844 metric tons or 7,528 tons) in volume, valued at $18.9 million, a 442% increase. While the volumes are smaller in Russia than in top markets like Japan and Korea, the increase is noteworthy. In 2010, the Russian market was essentially closed down to pork imports from the United States from January through May due to the country’s lingering concerns about the H1N1 virus. However, imports held steady for the second half of the year. The strong start in 2011 signals an encouraging trend for growth back toward 2008 market levels.

Russia is coping with the spread of African swine fever and there is growing concern for the security of the industrial pork industry as the disease moves beyond more remote areas toward Russia’s main pork production region.

Global Forecast
While these three countries are markets of note, the global outlook for U.S. pork exports also looks positive. In January and February, total pork exports stood at 337,160 metric tons (370,876 tons), an increase of 11% over last year. Those exports are valued at $831.3 million, a 17% increase. While competition in the international marketplace is stiff – particularly in high-value markets like Japan and Korea – the early returns for 2011 are extremely encouraging.

By Dan Halstrom, U.S. Meat Export Federation senior vice president of marketing and communications