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Pork Exports Headed in the Right Direction

Article-Pork Exports Headed in the Right Direction

Export data for March, released last week by the Commerce Department and USDA’s Foreign Agricultural Service indicated solid, although unspectacular, performance for U.S. pork exports so far in 2010.

Export data for March, released last week by the Commerce Department and USDA’s Foreign Agricultural Service indicated solid, although unspectacular, performance for U.S. pork exports so far in 2010.

Total U.S. pork exports for March amounted to 370.37 million pounds carcass weight equivalent, just 0.23% higher than one year ago. March shipments bring year-to-date exports to 1.047 billion pounds carcass weight, 1.3% higher than at the end of March 2009. Both of the percentage change figures are lower than they were at the end of February. But given last year’s difficulties, positive numbers are winners and are, no doubt, one big contributor to this year’s excellent pork and hog markets.

For comparison, U.S. beef exports were 26% higher this March vs. one year ago, while year-to-date beef exports were 25% higher at the end of March. Shipments were larger for every major beef market except Vietnam and Mexico, our largest beef exports customer since the discovery of bovine spongiform encephalopathy (BSE) in the United States in 2003. Vietnam, it should be noted, is a back door for beef entering China

The U.S. chicken industry has struggled mightily so far in 2010. March exports were closer to year-ago levels than any month so far this year, but they were still nearly 3% lower. Year-to-date, ready-to-cook weight chicken exports at the end of March were 15% smaller than one year ago. The biggest reasons for those declines, of course, are shipments to Russia, our heretofore largest chicken export customer, that were 79% lower as of the end of March, and a 35% decline in shipments to China/Hong Kong, our second largest market. The trade disputes that drove both of those situations have, at least in theory, been resolved so the performance of these two markets for U.S. chicken should improve.

Continuing the trend of 2009, Japan is still our largest export customer for pork muscle cuts, but Mexico continues to gain ground. March shipments to Japan were 4.6% smaller than last year, while shipments to Mexico were 28% larger. Exports to Japan are 11.8% smaller, year-to-date, while sales to Mexico are 28% larger so far in 2010.

Mexico is our largest market for pork products if one includes variety meats, even though variety meat exports as a whole have been sharply lower (down 18% in volume and 16% in value) so far in 2010. U.S. pork exports by destination are shown in Figure 1.

Exported Pork Values Up Slightly
The value of U.S. pork exports in March was 0.5% higher than last year. Year-to-date total pork export value is up 0.6% from 2009.

Canada’s pork exports in March totaled 100.948 metric tons (222.5 million pounds), 4.7% higher than in March 2009. Year-to-date, Canada had exported 276.3 metric tons (609 million pounds), 4.3% more than last year. Canada’s growth so far in 2010 has been driven by increasing trade with Russia (+33%), Mexico (+35%) and Philippines (+35%), while shipments to China, New Zealand and the United States – Canada’s largest pork export customer – have declined. While U.S. shipments to Japan have fallen this year, Canada has shipped 4.4% more pork there. Japan is Canada’s second-largest pork export customer.

Birthday Reflections – Prices Then and Now
I had the good fortune to celebrate another birthday recently and my bank, which cares deeply about my continuing survival, sent me a heartfelt birthday greeting that included some interesting tidbits about my birth year, 1957. The New York Giants got permission to move to San Francisco the next year. For once, the Yankees actually did not win the World Series. The Detroit Lions – yes, the most recent bumbling fools of the National Football League – were league champions. Some real milestones, huh?

Included in the greeting was one pretty interesting item – a comparison of various prices and economic measures in 1957 vs. now. Those, plus the Consumer Price Index for all goods, are shown in Figure 2. I’m sorry, but there was no retail pork price published in 1957. There was also no Consumer Price Index for meat published for 1957. But price multiples of the two food items, when compared to all of the others speak volumes about the efficiency of farmers – both American and Canadian. While incomes and home prices went up eight-fold and transportation-related costs went up by a factor of 10 or more, milk prices only tripled and bread prices went up by a factor of 7. The more similar the retail product is to a farm product, the better the deal it offers to today’s consumers.

Some will look at these comparisons and say they are proof positive that farmers are being robbed. That may or may not be true, but the multiples for higher farm-level-content products are lower only because farmers and the people who serve them with marvelous production inputs have driven the costs – and that can be read as “resources necessary per person” – of producing food and fiber lower and lower. More natural resources are available to feed a growing world. More minds and bodies are free to pursue economic activities other than feeding themselves. More wealth can be spent on housing, health care and activities that enrich one’s life beyond mere sustenance.

Take a minute to pat yourself on the back. We are all in your debt for making life better.

Click to view graphs.

Steve R. Meyer, Ph.D.
Paragon Economics, Inc.
e-mail: [email protected]