LIVESTOCK AND POULTRY
World Markets and Trade
March 1998

Status of U.S. Meat Product Exports in 1997

Faced with the financial crisis in Southeast Asia and Korea and sluggish demand in Japan, the rapid export growth experienced in recent years weakened in 1997 despite a strong rally in beef and pork exports in the last quarter of the year. The value of U.S. livestock product exports was $8.4 billion in 1997, virtually unchanged from 1996. When last reported in October, exports for 1997 were down 4 percent from the corresponding period in 1996. The strong year end rally boosted export values back to 1996 levels.

Japan remained the leading market for U.S. red meat, with total exports valued at $2.4 billion. The Russian Federation was the largest market for U.S. poultry, absorbing 38 percent of total exports valued at almost $793 million.

Whereas weaker export unit values of U.S. exports of beef, pork and poultry tempered export value gains in 1997, volume increased 13 percent, 6 percent and 8 percent respectively. (Volume levels used in this section are on a product weight basis.)

The market highlights of 1997 include:

• U.S. beef and veal exports in 1997 rose 13 percent to 692,000 tons, valued at nearly $2.5 billion. Export value only gained 3 percent in 1997 because export prices were sharply lower. Shipments to Japan increased 3 percent to nearly 346,000 tons, finishing strong in the latter half of the year. In 1997, Mexico was the second leading market for U.S. beef as shipments jumped 82 percent to about 107,000 tons. Exports to Korea totaled 90,000 tons, a 27 percent increase over 1996. Beef shipments to Canada fell 3 percent to 93,000 tons.

• In 1997, U.S. pork exports increased 6 percent over the previous year, reaching 324,500 tons for a value of more than $1 billion. Export surges to Canada, Mexico and Hong Kong fueled the export growth, outstripping 1996's export levels by over 30 percent. Export growth was dampened by a disappointing 9 percent decline in pork exports to Japan, accounting for over half of U.S. exports. A strong third and fourth quarter wave of exports to Japan could not compensate for early year losses.

• Beset by slow demand in Asia and low prices on product shipped to Russia, the value of U.S. poultry meat dropped 2 percent in 1997 to $2.4 billion. Despite lower exports to Hong Kong/China, the total volume of trade increased; however lower per unit export prices for leg quarters pulled down the overall value.

• In 1997, exports of hides and skins dropped by almost 7 percent to just over 22 million pieces. Due to favorable prices compared to 1996, export value increased by almost one percent to approximately $1.3 billion. Exports would have been greater had it not been for the Asian financial crisis that eroded earlier gains in Korea---which accounts for almost 40 percent of total U.S. hide exports. The impact of the disruption in the Korean hide market was swift. When the credit crunch prevented Korean tanneries from importing U.S. hides, U.S. cattle hide prices plunged from a weighted average of nearly $84/cwt. at the end of November 1997 to almost $68/cwt. by December 31, 1997.

• Tallow and grease exports, at $520 million dollars, dipped 10 percent in 1997 because of lower prices for competing vegetable oils and reduced import demand in the EU. Sales to Mexico, the largest U.S. tallow and grease market, totaled $153 million.

• Variety meat exports slipped 17 percent in value in 1997, finishing at $595 million. Weakened beef variety meat exports to Japan accounted for the slide, as exports fell from $422 million in 1996 to $255 million. Total beef variety meat exports fell 25 percent in value to $468 million.

• In the latter half of 1997, a wave of currency devaluations, stock market plunges and business failures swept through Indonesia, Malaysia, the Philippines, Thailand and South Korea resulting in credit shortages, falling incomes and inflation. Except for South Korea, these markets do not represent a large share of U.S. livestock exports, however, they are markets for potential export growth---but not in the near term. The financial crisis in South Korea, one of the leading markets for U.S. beef and the top market for U.S. cattle hides, has already impacted both beef and more notably hide exports. (See Asia article.)
  
• Avian flu ("bird flu") threw the Hong Kong poultry market into turmoil. The subsequent slaughter of the entire Hong Kong poultry population and consumer concerns about the safety of all chicken meat, have introduced considerable uncertainty about U.S. export prospects in this region. The Hong Kong/China market, one of the strongest growing markets for U.S. poultry meat, absorbed 24 percent of total exports in 1997.

• The Russian Federation, one of the strongest growing markets for U.S. pork and beef in 1997, expanded its purchases of U.S. beef and pork, with exports totaling nearly $67 million.

• The EU became the 7th largest market for U.S. pork in 1997, snapping up 8,400 tons of product valued at $25 million--which represents 2.6 percent of total pork exports. Exports of pork to Italy exploded from 220 tons in 1996 to 3,800 tons in 1997; exports to the United Kingdom almost tripled from 569 tons in 1996 to 1,496 tons in 1997 and exports to Germany nearly doubled increasing from 418 tons to 781 tons.

• Pork exports to Australia fared surprisingly well. Australia, traditionally a small importer of pork, imported almost 1,400 tons of U.S. processed pork, up from 80 tons in 1996. Australia prohibits fresh pork from the United States to control the spread of Pseudorabies Virus (PRV), Porcine Reproductive and Respiratory Syndrome (PRRS), Transmissible Gastroenteritis (TGE) and Trichina. Australia recently permitted fresh pork imports from Canada, primarily all boneless and mainly legs or middles.

• U.S. pork exports also did well in some nontraditional markets like New Zealand and Venezuela. Pork exports to New Zealand reached 977 tons in 1997, a 22 percent increase. Exports to Venezuela skyrocketed from 51 tons in 1996 to 1,027 tons in 1997.

• Beef exports to Poland exceeded expectations in 1997 jumping from 314 tons in 1996 to 2,239 tons valued at almost $47 million. Though most high quality cuts of U.S. beef are too expensive, there are niches for choice meat and for tripe.

• U.S. beef exports increased significantly in some smaller markets such as Egypt and South Africa. In 1997, U.S. beef exports to Egypt rose to 688 tons, an increase of almost 300 percent. Some U.S. quality beef continues to be exported to Egypt despite local limitations on the maximum fat content in frozen meat for direct consumption. Exports of U.S. beef to South Africa climbed from 27 tons in 1996 to 304 tons in 1997, as export opportunities emerged due to the ban on EU imports and that South Africa was in a herd building phase.

• U.S. exports of poultry meat to South Africa picked up again in 1997, posting a 102 percent gain. South African importers increased the pace of sales early in the year to avoid imposition of higher tariffs. U.S. exports increased from nearly 27,000 tons in 1996 to 54,000 tons in 1997. U.S. exports had slipped in 1996 because of the devaluation of the South African rand against the U.S. dollar.

• While hides and skins exports slipped 6 percent to Korea, exports exploded to the Dominican Republic, South Africa and Guatemala with significant volume increases.

• Tallow exports to Germany escalated to 9,300 tons in 1997, an 810 percent year-over-year increase. Exports of tallow to Indonesia increased 104 percent in 1997 to 1,073 tons.

In 1998 red meat and poultry exports are projected to be near the 1997 level. Beef and pork are projected to decrease 2 percent and 5 percent respectively in 1998 due to weakened demand in key Asian markets. Total poultry exports are forecast to increase only 2 percent in 1998 with shipments to Russia expected to grow, albeit at a slower pace than in previous years. Tallow exports, tempered by the Asian financial crisis, are expected to drop from approximately 944,000 tons in 1997 to 900,000 tons in 1998. Hides and skins exports are projected to increase slightly in 1998 as a result of growing sales to Mexico, the EU and China.

Last modified: Thursday, April 06, 2000