June pork exports to China were lower than expected, emphasizing the importance of focusing on other markets
By Jackie Clark
Though pork exports from the U.S. are still breaking records, the most recent report from the U.S. Meat Export Federation (USMEF) revealed some unexpected trends that emphasize the importance of promoting U.S. pork around the world.
“Exports to China in June were down more than we anticipated,” Joe Schuele, vice-president of communications at the USMEF, told Farms.com.
Meat industry experts anticipated some decline because of supply disruptions in packing plants due to COVID-19 outbreaks, however, the impact was greater than predicted.
“We had interruptions in supply in April and May and we expected a lingering impact into June, but it was a bit more than we anticipated,” Schuele said. “We do expect pork exports to China to rebound now that our production level is back to where it was earlier in the year. And we expect exports to China to remain quite high into 2021.”
However, even once supply stabilizes, there will likely be an eventual decline in demand for pork from China, once the country has African swine fever (ASF) under control and can ramp up domestic production.
“Pork-supplying countries certainly need to be mindful of that,” Schuele said.
“The reality (is) that China’s demand for pork will eventually moderate and that’s why we have been stressing the importance of growth in other markets, which we were really quite successful at achieving,” he explained.
Pork exports to other markets were particularly successful at the beginning of 2020. However, “it was harder to keep those volumes up … once we had supply interruptions. So, we need to get back to not only stronger levels to China, but to keeping these other markets growing,” he added.
For the U.S. pork industry, Mexico is a high priority for large cuts for further processing, but also the retail market. Mexico and Columbia are key importers of U.S. pork in Latin America.
Those countries “are two markets that are really critical to our volumes, especially for cuts for further processing,” Schuele explained. “One of the obstacles has been that Mexico’s currency, along with Columbia’s currency … have been hit perhaps the hardest through this pandemic. That knocks down their purchasing power.”
Demand should increase when the countries recover further from the impact of the pandemic.
“Mexico (is) especially important because it’s such an efficient market to serve,” Schuele said. Product can be shipped quickly from plants in the U.S. to buyers in Mexico.
Pork export officials in the U.S. are also keeping an eye out for demand from other regions of the world.
“We’re capitalizing on some new opportunities in Vietnam” which was hit hard by ASF, Schuele said. “A similar situation is playing out in the Philippines. The Philippines has not had the uptick in the imported pork demand yet that Vietnam has, but we think that will happen.”
The Philippines would, under normal circumstances, be a top market for raw material for further processing, he explained. But current processing capacity is limited due to the effect of the pandemic on the labour force.
“We do feel like that opportunity is coming, so that’s another market we’re watching very closely,” he added.
The new free trade agreement between the U.S. and Japan also offers export opportunities.
“We really felt like that agreement was paying tremendous dividends in the first months of this year, and will again once we start seeing the supply chain in full recovery,” Schuele said. The U.S. had previously faced a tariff disadvantage in the Japanese market compared to competitors like Canada and Europe, but expect more growth with an even playing field.
South Korea had offered another potential opportunity, particularly when ASF entered the country. However, the pork industry there was fairly successful at keeping the virus out of their domestic herd.
“South Korea is also a very strong Asian market for us, but Korea has a very high level of domestic production right now so, even though our market share is holding pretty steady in Korea, most suppliers are seeing a downturn in exports,” Schuele explained.
Finally, Central America is another region seeing growth in demand for U.S. pork.
Honduras and Guatemala are the main U.S. markets in Central America, however “lately we’ve seen other markets in that region increase their volumes. Exports to Panama were way up last year,” Schuele said. Nicaragua and El Salvador are also importing more U.S. pork.
Schuele believes the U.S. is positioned well to not be too reliant on China for pork demand.
“Our exports to China are at a very high level now and the percentage that we’re exporting to China is certainly higher than usual. Right now, it’s running around 36 to 37 percent of our total export volume. … That’s unusually high, but it’s not as high as what we’re seeing from other suppliers,” he explained.
For example, Europe sends about 67 percent of exported pork to China, and Brazil is exporting about half of their pork to China (70 percent if you include Hong Kong).
Other market opportunities will be increasingly important when the demand for pork from China declines.
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