International Meat Trade is Both Important and Variable
There is a lot of talk about international trade these days. The changing value of the U.S. dollar against other currencies and the trade deficit have made headlines. On the agricultural side, meats are actively traded around the world.
Meat trade is not only important for processing companies, it also affects farmers through price impacts. For this year, the U.S. is likely to export over 8 billion pounds of meat. About 60% of that will be chicken. Pork will be over 30% and beef will be less than 10%.
The U.S. only exports chicken and turkey, none is imported. However, we have active trade in both directions for pork and beef. Pork exports have been a real success. 10 years ago, the US imported more pork than it exported. But now, pork exports are 2½ times imports, taking 12% of U.S. production. Most of our pork goes to Japan, Korea, Russia and Mexico.
Trade can be easily disrupted. A few years ago, the poultry market was rocked when Russia banned U.S chicken. The stated reason was sanitary regulations. But, coincidentally, we were also in the middle of a trade dispute over steel and many observers believed that chicken was being used as a way of retaliation against U.S. trade policy.
Beef trade had become increasingly important to the U.S. industry. In 2003, the U.S. exported 2.5 billion pounds of beef, about 9% of production. At the same time, we imported 3 billion pounds, about 12% of production. Initially, this does not seem to make much sense. Why would a country import and export the same product? Well, the reason is that they are not the same product. The US exports mostly high valued cuts and imports hamburger beef. As a result, the VALUE of what the US exports is greater than the value of imported beef.
In 2003, BSE was found in Canada. That led to dramatic changes in beef trade. Canada was shut out of world markets. Then at the end of the year, a US cow was found with BSE, and the US was shut out. Exports dropped to less than one fifth of earlier levels and imports jumped. Mexico is now the biggest buyer of US beef. Intense negotiations continue with Japan to open that market. At the same time, the USDA is drafting regulations to allow live cattle to come into the U.S. from Canada, in addition to boneless beef cuts which are already permitted.
On the import side, things are changing quickly. South and Central America, which accounted for about 1/7 of our imports in 2003, now make up almost 40%. New Zealand and Canada are the other key sources. Australia, which used to dominate, is sending much of its beef to Japan and S. Korea, filling the gap left when US beef was dropped.
The bottom line – meat trade is going to continue to be important and also continue to be erratic because of the way government policies can encourage or hinder movement of agricultural products.
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