Swine and Pork
Global pork exports increased 13 percent in 1999 as strong import demand occurred in Korea, Japan, the United States, and Mexico. Global pork exports are forecast to decrease less than 1 percent in 2000 as strengthening Asian import demand is not likely to offset lower import demand in Russia.
Total pork production for the selected countries covered in this report increased nearly 2 percent in 1999. Pork production increased substantially in Canada, with smaller but notable increases in the United States, Brazil, and the European Union. Pork production is forecast to climb 1 percent in 2000 as increased production in China, Brazil, and Canada is expected to offset declines in the United States, the European Union, and Eastern Europe.
Pork consumption in 1999 for selected countries amounted to 79.3 million tons, a 2-percent year-over-year increase, due to abundant supplies and low global pork prices. The United States, the European Union, Canada, and Brazil account for the greatest consumption gains, largely due to strong increases in production and income gains. Total consumption is forecast to increase nearly 2 percent in 2000. Chinese, Brazilian, and Canadian pork consumption are forecast to increase 3, 10, and 8 percent, respectively, while consumption in most of the world is forecast to remain steady or decline slightly.
Total 1999 pork imports for selected countries increased 16 percent to reach 2.5 million tons. Korean and Japanese import demand produced the strongest year-over-year gains, with imports increasing 142 and 19 percent, respectively, over 1998 levels. Strong import gains in the United States and Mexico helped to offset weaker imports in Eastern Europe. Total pork imports for selected countries are forecast to decrease 1 percent in 2000, as strengthening Asian import demand is not likely to offset lower import demand in Russia.
Although Eastern European and Chinese pork exports continue to suffer from the loss of the Russian commercial market, U.S. and EU pork exports were boosted by food aid exports to Russia and rebounding exports to Asia. Total 1999 pork exports for selected countries increased 13 percent, with the strongest gains coming out of Canada and the EU. U.S. pork exports, excluding both food aid and commercial exports to Russia in 1998 and 1999, increased 10 percent year-over-year in 1999, with growth in commercial exports to Taiwan, Korea, Mexico, and Japan. Total pork exports are forecast to remain stable in 2000. Canadian, U.S. and Brazilian pork exports are forecast to increase, while EU pork exports are forecast to decline.
Although official data show 1999 U.S. pork exports declined 5 percent to 530,000 tons, a technical problem prevented nearly 50,000 tons of P.L.480 Title I pork shipments to Russia from appearing in U.S. Census Bureau trade data. USDA and US Census are working to include these data in future updates. Excluding Russia, U.S. pork exports in 1999 increased 10 percent over 1998. In 1999, U.S. pork exports to Japan, Mexico, and Korea increased, while exports to Canada were nearly unchanged and exports to Hong Kong decreased.
Exports are forecast to increase about 3 percent in 2000 as Mexico, Canada, and the Asian markets are expected to remain important destinations for U.S. pork. Although U.S. pork exports to Canada are expected to show little year-over-year growth, Canada will likely remain the third largest export market for this product. Exports to Mexico and the Asian markets are expected to offset lackluster exports to Russia as import demand there is likely to be weak due to continued economic uncertainty.
U.S. pork imports increased nearly 18 percent to 375,000 tons in 1999 as large Canadian pork supplies flowed south in step with an increase in Canadian pork production and continued strength of the U.S. dollar. Canada accounted for 75 percent of total U.S. pork imports, while Denmark and the EU accounted for 16 percent. U.S. pork imports are forecast to increase 6 percent to 397,000 tons in 2000 as Canadian production is expected to increase and the United States is likely to remain Canadas most important export market.
U.S. live hog imports increased marginally to 4.14 million head in 1999. Contrary to the composition of 1998 live hog imports, U.S. slaughter hog imports slowed in 1999 while feeder hog imports increased by more than 20 percent. Live hog imports are expected to decrease 20 percent to 3.3 million head in 2000 due to expanding slaughter capacity in Canada. U.S. live hog exports decreased 23 percent to 176,000 head in 1999 under pressure from the Mexican anti-dumping compensatory duty. The duty will likely remain in place throughout 2000. As a result, live hog exports are forecast to decrease 43 percent to 100,000 head in 2000.
Canadian slaughter, estimated roughly 7 percent higher than in 1998, translated into significant increases in Canadian pork production and increased exports in 1999. Canadian exports to the United States, Japan, Korea, and Australia made significant year-over-year gains, reaching record levels in 1999. Exports to the United States and Japan are 20 and 25 percent higher than a year earlier, respectively, while exports to Korea and Australia have more than doubled. Canadian exports are expected to remain strong through 2000 given projections for record level pork production into 2001. Conversely, Canadian pork imports in 2000 are expected to decline.
Hog trade between the United States and Canada continues to be dominated by U.S. imports of Canadian hogs. U.S. imports of Canadian slaughter hogs rose to 4.14 million head in 1999, slightly more than 1998 imports, but well above the 10-year average of 2.3 million head. Rapid expansion of Canadian slaughter facilities and processing plants in the western provinces of Manitoba, Ontario, and Alberta have led to decreased slaughter hog exports to the United States, while a lack of Canadian finishing operations has led to an increase in U.S. imports of feeder pigs in 1999. The shift in the composition of live hog imports suggests a transition in U.S.-Canadian live hog trade and may indicate a growing trend towards cross-border linkages between U.S. and Canadian hog producers. Canadian slaughter hog exports are expected to continue to decline as expansion progresses in the western Canadian packing industry.
Effective October 6, 1999, Canada implemented a revised Health of Animal Regulation which is expected to greatly facilitate the importation of U.S. slaughter hogs. While Canada had originally revised its import requirements in December 1998, onerous transportation and waste management requirements limited Canadian packer import demand and gains in U.S. hog exports to Canada in 2000 may increase to nearly 25,000 head under the new regulations as expanding Canadian slaughter capacity is expected to increase demand for hogs. Though this would represent a significant gain over total 1999 hog exports, bilateral hog trade is expected to continue to favor Canada.
Mexican pork production amounted to 970,000 tons in 1999, a two-percent increase over the 1998 production level. Higher slaughter rates offset slightly lower slaughter weights and allowed for gains in 1999 Mexican domestic consumption. Pork production is expected to increase slightly in 2000, as Mexicos economy is forecast to strengthen. However, gains in production will most likely be partly offset by continued reliance on higher cost imported feed grains and further consolidation within the Mexican hog sector.
Annual Mexican pork imports increased roughly 3 percent to reach 100,000 tons in 1999, with U.S. pork accounting for over 80 percent of that amount. Total 1999 U.S. pork exports to Mexico were 10 percent ahead of 1998 pork exports, reaching nearly 61,000 tons (PWE). Mexico's relative economic stability, in addition to the quality, consistency, and price competitiveness of U.S. pork, are expected to contribute to growth in Mexico's import demand. Mexican pork imports are projected to increase slightly to 110,000 tons in 2000 as Mexicos domestic production, although expected to increase, will most likely not meet domestic demand.
U.S. slaughter hog exports to Mexico slowed considerably during the last 2 months of 1999 to total 161,000 head, 34 percent below 1998 imports. Pressures from Mexico's October 1999 final anti-dumping ruling and its ensuing countervailing duty on U.S. live hogs, pressured U.S. hog exports to Mexico. The duty, $0.351 per kilogram (48 percent ad valorem equivalent), is in addition to the 8 percent in-quota import tax. The compensatory duty is likely to continue impacting U.S. hog exports to Mexico through 2000, with total Mexican hog imports estimated at 75,000 head, down 53 percent from 1999 imports.
In 1999, Chinas pork imports totaled 80,000 tons, nearly twice the 1998 quantity, while exports dropped 27 percent to 119,000 tons. In 1999, ending hog inventories reached 427 million head, a 1-percent increase over the same period last year. Hog inventories are forecast to climb minimally to 434 million head by the end of 2000.
On November 15, 1999, China and the United States signed a bilateral agreement for Chinas accession to the World Trade Organization (WTO). When China enters the WTO, the agreement would reduce the frozen pork tariff from 20 percent to 12 percent over a 4-year period. In the first year, the tariff for frozen pork would decrease to 18.4 percent.
The Hong Kong pork market appears to have stabilized after a decade of decline. Domestic pork production totaled 162,000 tons in 1999 and is forecast to decrease less than 1 percent in 2000. Imports totaled 254,000 tons in 1999 and are expected to increase marginally in 2000. Exports totaled 44,000 tons in 1999 and are forecast at this level in 2000. Pork consumption totaled 372,000 tons in 1999 and is forecast to increase less than 1 percent in 2000.
Hong Kongs pork import market continued to be dominated by China and Brazil due to their competitive prices. In 1999, imports from China equaled 57,624 tons (PWE) to Hong Kong, a 13 percent year-over-year increase, while imports from Brazil remained nearly unchanged at 33,843 tons (PWE). In 1999, U.S. pork exports totaled 15,973 tons (PWE), a 26 percent decrease.
In 1999, Hong Kongs re-export trade to China was hampered by an abundant supply of Chinese poultry products that reduced demand for imported pork. This situation is expected to prevail in 2000.
Under the dual pressures of environmental concerns and food safety awareness, Hong Kong has modernized its livestock slaughter facilities. In the past, centralized slaughter took place primarily in three out-dated abattoirs built over 30 years ago. Because the industry could not cope with the growing demands of todays hygienic and environmental standards, the government built a new slaughterhouse in Sheung Shui to replace the three existing abattoirs.
This state-of-the art facility is the largest in Asia and has the capacity to process 5,000 pigs, 400 cattle and 300 goats per day. The slaughterhouse began operating in August 1999 and is expected to be fully operational in July 2000.
In 1999, pork imports increased 142 percent to 160,000 tons. Imports from the United States, Canada, France, and the Netherlands more than doubled, but Denmark remained Koreas top supplier.
Pork imports increased dramatically during the first half of 1999 due to a favorable price differential with domestic products. Imports decreased in the second half of 1999 as a result of the Belgian dioxin scare. In 2000, pork imports are forecast to decrease 9 percent to 145,000 tons because of increased domestic production.
Consumers reacted to the Belgian dioxin scare by demanding more domestic pork, causing swine producers to increase production. The number of piglets increased significantly during the last 4 months of 1999 and boosted the pig crop 5 percent over the 1998 level. The pig crop is expected to increase an additional 4 percent in 2000.
Record high swine prices between May and August 1999 kept many marginal operations from exiting the industry. The markets reaction to the large supply of pigs entering the market in 2000 should lower profit margins and push marginal operations out of the industry.
Koreas pork exports to Japan remained strong throughout 1999 despite worries of hog cholera. Japan has threatened to ban Korean pork because of hog cholera. Korea and Japan will soon enter bilateral discussions to address this issue, and the outcome will determine whether Korea continues to have access to the Japanese pork market. Because Japans new country-of-origin labeling requirement began in 2000, Korea will also have to improve the image of its pork products to maintain exports.
In 1999, hog slaughter decreased 8 percent to 9 million head. As a result, pork production decreased 8 percent to 820,000 tons and spurred imports to nearly quadruple to 80,000 tons. In 2000, pork production is forecast to increase 8 percent to 885,000 tons, and pork imports are forecast to decrease 25 percent to 60,000 tons.
In January 2000, the 2-year grace period for the Chemical Oxygen Demand standard for pig farm waste water ended, forcing hog producers to comply with more stringent environmental controls. The new standard is expected to force many of the remaining small and less efficient producers out of the market. The previous wholesale exit of inefficient producers occurred as a result of the 1997 FMD outbreak.
Because Taiwans pig population dropped nearly one-third following the FMD outbreak, a serious shortage of pork variety meats, lard, and pig bones occurred. In January 2000, Taiwans Board of Foreign Trade announced that the U.S. and non-U.S. quotas for pork variety meats and pork bellies would be merged into global quotas open to all WTO members on a most favored nations (MFN) basis.
The United States, Canada, Australia, New Zealand, Japan, Korea, and Sweden meet Taiwans quarantine and food safety requirements for pork and pork offal. Denmark has applied for Taiwans quarantine/food safety approval, but the process is expected to take some time because Denmark has not exported these products to Taiwan in the past.
In 1999, Japanese pork production remained unchanged at nearly 1.3 million tons and is forecast to remain at this level in 2000. Depressed domestic carcass prices are a disincentive for Japans high-cost producers to expand. In January 2000, Japans Ministry of Agriculture, Forestry, and Fisheries expanded its initial buyout program from 13,000 head to 56,000 head in an effort to shore-up depressed wholesale carcass prices above the official intervention level.
In 1999, imports increased 19 percent to 857,000 tons as consumers demanded more household table pork and processed products. In 2000, imports are forecast to increase less than 1 percent as demand for these products softens.
The competition for Japans chilled pork market is intensifying as meat traders and end users place more attention on quality characteristics and cutting specifications. In 1999, chilled pork imports from the United States, Canada, and Korea increased 11 percent, 16 percent, and 13 percent, respectively.
Japan imported 171,553 tons (PWE) of frozen pork from Denmark in 1999, a 38-percent increase from 1998. Because sales of ham and sausage gifts were unexpectedly solid last summer, suppliers procured more frozen raw material. However, lackluster winter gift sales and oversupplies may turn this trend around in 2000. Imports of frozen pork from Canada increased 51 percent in 1999, while imports from the United States and Korea decreased 6 percent and 18 percent, respectively.
Pork production in the EU totaled 17.6 million tons in 1999, 387,000 tons or 2 percent more than 1998. Germany, Denmark, the Netherlands, France, and Spain continue to be the major EU producers, with significant portions of Dutch and Danish production destined for third country export markets. While pork production is forecast to decline throughout most of the EU in 2000, Spain remains a growing producer within the Union and is poised to expand production. Pork production elsewhere in the EU, namely France, Germany, Denmark, and the Netherlands, is not expected to increase. Many of these industries are coming under increasing pressure from saturated domestic markets, limited growth in third country export markets and over-production which have caused attrition of smaller producers and industry concentration. Total EU pork production in 2000 is expected to decrease slightly.
EU pork exports increased significantly in 1999, showing a year-over-year gain of 30 percent. In spite of burgeoning global pork supplies and continued economic instability in Russia, large gains in EU exports since 1998 are largely attributed to the EU's aggressive use of export subsidies, private storage aid, and food aid to Russia. Export restitutions and financial storage assistance have allowed EU producers and exporters to creatively forward contract and export at highly competitive export prices. Most notably, the Danish and the Dutch have made substantial export gains to Japan, Korea, and Hong Kong. Current use of export subsidies is well ahead of last year's pace, with the EU already reaching 70 percent of this year's commitment level within the first eight months of the July 1999/June 2000 WTO year. It is expected that EU pork exports will decrease in 2000 as the EU will be limited in its subsidy use in the 2000/2001 WTO year and supplementary food aid to Russia is unlikely. Total 2000 EU pork exports are expected to decrease 5 percent, dropping to 1.24 million tons.
In 1999, the Russian hog sector continued to contract as a result of the August 1998 ruble devaluation. Ending inventories for hogs decreased 2 percent to 16.1 million head as weak demand, high credit costs, and inadequate domestic grain supplies plagued the sector. Ending hog inventories are expected to decrease an additional 4 percent in 2000.
As a result of the economic crisis, Russia received 50,000 tons (PWE) of pork food aid from the United States and 100,000 (PWE) tons of pork food aid from the EU in 1999. Despite this relief effort, consumption in 1999 decreased 2 percent to 1.8 million tons and imports decreased 7 percent to 350,000 tons.
It is unlikely that the United States will offer pork food aid to Russia in 2000. Because the EU continues to heavily subsidize pork exports to Russia, this trade is expected to replace what was sent as food aid. Therefore, Russian pork consumption and imports are forecast to remain unchanged in 2000.
For further information, contact Melissa Schmaedick, (202) 720-7715, Yoonhee Macke, (202) 720-8252, or Tony Halstead (202) 720-8031.