U.S. Variety Meat Exports on the Upswing
The United States continues as the world's leading offal exporter by a large margin. In 1998, U.S. variety meat exports increased 5 percent as food safety concerns subsided in Japan.
In 1998, U.S. variety meat exports increased 5 percent to 447,647 tons. In 1997, variety meat exports dropped 10 percent primarily as a result of food safety concerns in the Japanese market. In that year, Japanese consumers reduced meat consumption in response to outbreaks of E.coli and the Bovine Spongiform Encephalopathy (BSE) situation in the European Union (EU). Historically, the last major setback for variety meat exports occurred in 1989 when the EU enacted the beef hormone ban. Although U.S. exports to the EU dropped nearly 70 percent in 1989, exports to Japan and Mexico grew significantly in subsequent years and became market leaders.
U.S. Variety Meat Exports
The recovery of export markets has been good news for the U.S. livestock industry because it is one of the world's largest producers of variety meats. Since per capita consumption of variety meats is extremely low in the United States, the best domestic alternative for these products is to utilize them in the pet food industry. However, the livestock industry relies mainly on strong overseas demand to generate revenue from these products.
In many foreign markets, variety meats are seen as delicacies and can even be more expensive than some muscle meats. Revenue generated from export sales benefit packers, livestock producers and exporters because it adds to the total value of each animal. The combination of having an abundant supply of variety meats and extremely low domestic consumption has allowed the United States to be the world's largest exporter of variety meats.
Beef variety meats, especially livers and tongues, continue to dominate U.S. exports. In 1998, beef variety meats (tongue, liver, heart, sweetbread, kidney, brain, lip and other bovine offal) represented 69 percent of all U.S. variety meat exports, an increase of 8 percent over the previous year. Japan and Mexico were responsible for the increased exports. Pork variety meat (tongue, liver, heart, feet, headmeat, rind and other porcine offal) represented 29 percent of all U.S. variety meat exports, a decrease of 3 percent compared with a year earlier. Reduced imports by Mexico was largely responsible for the decrease. Other variety meats derived from sheep, lamb and goat played an insignificant role in exports.
In 1998, Japan was the top market for U.S. variety meats. The U.S. exported 115,762 tons of variety meats to Japan, a 12-percent increase over last year. This rise was possible because E.coli and BSE health issues receded from the forefront for Japanese consumers. Beef tongue exports to Japan represented the bulk of increased trade and were sparked by a 15-percent decrease in unit value.
In the past, Japanese consumers have reacted strongly to changes in the unit value of beef tongues. When the unit value dropped 40 percent between 1994 and 1995, beef tongue exports tripled. When it dropped even further between 1995 and 1996, beef tongue exports increased even more. In fact, the boom in variety meat exports to Japan between 1995 and 1996 was due in large part to increased exports of beef tongues. Because beef tongue has such a high unit value compared with other variety meats, Japan has traditionally been the top market in terms of total value. In 1998, the United States exported more than $290 million worth of variety meats to Japan, nearly half the value of all variety meat exports.
Exports of variety meats to Mexico declined 1 percent to 108,257 tons in 1998. Mexican sausage companies continue to utilize U.S. pork variety meat as an ingredient due to attractive pork prices and the high quality of U.S. products. Domestically produced sausages containing imported ingredients have found a niche market in Mexico, particularly among middle and upper income consumers.
Between January and August 1998, the United States exported 41,269 tons of variety meats to Russia. A majority of these exports were beef livers. When the Russian economic crisis began in August 1998, consumers reacted by purchasing more low-end food products. Overall demand for domestically produced meat offal, such as feet and tails, increased significantly. However, the collapse of the banking system and the devaluation of the ruble caused Russian foreign trade activity to nearly cease. This held true for U.S. variety meat exports. For September through December 1998, variety meat trade fell to just 1,086 tons. However, the U.S. Russian food aid package will support sales of beef variety meat in 1999. The agreement calls for concessional sales of 120,000 tons of beef, part of which will be variety meats, most likely beef livers and hearts.
Exports of beef and pork variety meats to Taiwan reached record levels in 1998. This was due to the successful implementation of the beef and pork "down payment" quotas provided for in the WTO Bilateral Agreement signed by Taiwan and the United States. This agreement was reached in February 1998 and implemented in June.
Taiwan's preliminary import data indicated that 93 percent of the 7,500-ton quota for U.S. pork variety meats entered the country. Preliminary data also indicated that 38 percent of the 5,000-ton quota for U.S. beef variety meats entered Taiwan. Quota that went unused in 1998 will be added to the 1999 quota. A major reason that the beef variety meat quota was not completely filled was that importers had a difficult time finding U.S. products that met Taiwan's requirements. However, importers made significant progress identifying U.S. meat plants that will be able to meet these specifications, and are confident that they will have a much easier time finding products appropriate for this market in 1999.
U.S. variety meat exports to the European Union continue to be affected by the EU beef hormone ban enacted in 1989. Prior to the ban, the United States exported 71,792 tons of variety meats to the EU, most of which originated from cattle. In 1989, variety meat exports fell nearly 70 percent. Over the decade, exports have continued at a fraction of previous exports. On May 29, 1998, a WTO arbitrator ruled that the EU must comply with its WTO obligations by removing the hormone ban by May 13, 1999.
Overall, U.S. variety meat exports are expected to remain steady in 1999. However, if exports to Japan continue to regain lost ground, exports may rise.
For further information, contact Tony Halstead, (202) 720-4185.