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Swine and Pork
Global pork exports are forecast slightly higher in 2001 as pork production in the United States and Canada expands, the EU contracts further, and the global economy continues to grow. Import demand is expected to grow in most major markets, with the single exception of Korea. U.S. pork exports are expected to grow by 4 percent in 2001 due to strong import demand from Mexico, Russia, and Japan.
Note: All volumes in the following article and in the pork tables are in carcass weight equivalent.
Total pork exports for 2001 are forecast slightly higher at 3.05 million tons, up 21,000 tons from 2000 as consumer demand for pork rises in response to generally favorable economic conditions. Canada and the United States are forecast to increase pork exports year-to-year. In 3 years, Canada has nearly doubled its pork exports and is the world’s largest pork exporting country. However, the EU as a trading bloc is the largest exporter, but EU pork exports are contracting due to further cuts in subsidies. Taiwan, a major pork exporter prior to 1996, continues to face foot and mouth disease (FMD) issues and is not forecast to export pork products.
For 2001, pork production in the major producing countries is forecast at a record 84.47 million tons, up 2.04 million from the 2000 estimate. Production increases in the United States, Canada, and China more than offset a decrease in the EU. In the United States and Canada, lower feed grain costs and improved market prices for hogs and pork in 2000 will lead the industry to expand production. For the EU, pork production is slightly lower due to a shrinking hog herd caused by lower prices and environmental concerns.
For selected countries, 2001 pork imports are forecast at a record 2.78 million tons, up 148,000 tons from the previous year. Increases in Russia, Mexico, Japan, and Poland more than offset a decrease in South Korea. The improving economy in Russia and continuing economic growth in Mexico increase the demand for meat, including pork. An outbreak of FMD in South Korea in March 2000 resulted in a curtailment of South Korean pork exports, thus increasing Korea’s domestic pork supply and reducing its imports. Japan (the world’s largest pork importing country) and the United States are forecast to increase pork imports from the previous year due to continued strong consumer demand.
U.S. pork exports for 2001 are forecast at a record 593,000 tons, up 4 percent from the 2000 estimate. Low feed costs are providing incentives for hog producers to increase production, and expected lower U.S. prices are combined with continued strong demand in Japan and Mexico to spur U.S. pork exports. The most recent data for 2000 indicate that Japan accounts for about 50 percent of U.S. pork exports and Mexico 20 percent.
U.S. pork imports for 2001 are forecast at
a record 456,000 tons, up marginally from the estimated 2000
level. A growing U.S. economy and a strong dollar against other
currencies, together with increased pork consumption, will likely
fuel additional pork imports. Canada accounts for nearly three
quarters of the pork imports, while the EU captures most of the
remaining market. As Canada expands production capacity, it will
continue to sell pork to the United States. Since 1995, U.S.
imports from Canada have grown almost 40 percent.
U.S. pork production for 2001 is forecast at 8.79 million tons, up almost 3 percent from the previous year as farrowing intentions in late 2000 and early 2001 imply an expanding herd, larger pig crop, and increased slaughter. Improved genetics, adoption of new technologies, and changing management practices are expected to continue to boost the productivity of the breeding herd.
As the producers retain gilts for the breeding herd and expand production, the 2001 annual hog slaughter is forecast at 99.98 million head. While below the 101.03 million and 101.54 million head slaughtered in 1998 and 1999, respectively, when hog prices fell dramatically, hog slaughter capacity may be tested once again. Live hog prices will likely experience downward pressure by the 4th quarter due to the expected expansion in the pig crop in 2001.
For 2001, U.S. live hog imports are likely to be lower than the previous year as Canada is expected to increase its slaughter capacity and cut hog exports to the United States. However, Canadian feeder hogs are expected to outpace slaughter hogs in the import mix for the coming year as Canada’s production of feeder pigs exceeds finishing capacity. For 2001, U.S. live hog exports are nearly unchanged from the previous year, assuming that Mexico’s anti-dumping duty is not lifted and U.S. slaughter hog prices do not fall dramatically. However, there is a market opportunity for slaughter hogs over 110 kg in Mexico as the government recently revised its protocol and added another border crossing to inspect slaughter hogs.
Canada
Canada’s pork exports are forecast to reach a record level in 2001 at 850,000 tons, up 13 percent from 2000 due to record pork production and continued strong demand in the U.S. market. Lower Danish pork exports and increased Canadian pork exports have vaulted Canada to the world’s leading pork exporting country starting in 1999. Over 60 percent of Canada’s exports land in the United States, while Japan follows with an 18 percent market share. South Korea, Australia, Mexico, New Zealand, Taiwan, and Cuba are other leading export markets for Canada.
Pork
production for 2001 is forecast at a record 1.80 million tons, up
7 percent from the 2000 estimate. As Canada increases pork
production, the industry is aggressively seeking to expand pork
exports. Reportedly, Maple Leaf Food will launch a new version of
its Signature Pork program for western Canadian producers. The
company’s private program, which started 4 years ago in
Ontario, offers contract terms, forward price offerings and merit
bonuses, and includes feed programs, genetic requirements,
production protocols (for operations and health), and C$1 or C$3
per-hog participation bonuses. Maple Leaf, which is attempting to
procure sufficient hogs to operate its Brandon plant at
single-shift capacity, claims this type of top-to-bottom
co-ordination is being driven by industry consolidation,
value-added goals, and the demand, especially in Japan, for what
the industry terms "story pork", or pork where the
details of the meat's origin through the production process is
known.
Canada’s hog industry continues its trend of increased hog slaughter capacity, reduced live slaughter hog exports, higher feeder pig exports to the United States, greater investment in hog production facilities, and increased pork exports. Although the number of federally inspected plants has decreased from 50 in 1993 to 44 in 1999, the average number of hogs slaughtered per plant per year has reportedly risen from 277,751 to 395,428 head. Hog slaughter in 2001 is forecast at a record 21.50 million head.
Investment in the hog industry is expanding, but environmental concerns may become a limiting factor. Recently, the Taiwan Sugar Corporation announced its bid to develop a $29 million hog production farm in east central Alberta which would raise 150,000 hogs annually and ship them to existing slaughter facilities. (Taiwan Sugar Corporation had been denied permission at another location previously due to environmental concerns.) In addition, World Wide Pork is planning to expand its facility so that 300,000 hogs could be slaughtered and 225,000 hogs processed annually. The expansion is due to increasing Asian demand, primarily from Japan.
Live hog imports for 2000 and 2001 are expected to be steady. Canada opened opportunities to additional U.S. hog imports in 2000. It streamlined import procedures for U.S. slaughter hogs on October 7, 1999, and simplified import requirements for slaughter hogs from pseudorabies-free states in the United States. Additionally, in May 2000, Australia and Canada reached agreement on segregation procedures for Canadian packing plants that want to slaughter U.S. hogs without jeopardizing their ability to ship Canadian pork to Australia. Australian officials had formerly refused product from any Canadian plant where U.S. hogs were slaughtered.
Mexico
Although Mexico’s pork production is forecast at a record 1.04 million tons, up 3 percent from the previous year, pork imports for 2001 are forecast to rise to a record 150,000 tons, up 15 percent from 2000. The Mexican economy continues to strengthen due to a rebound in world oil prices and the government’s conservative fiscal policy. Improved consumer purchasing power is creating demand for pork and pork products, but the lack of adequate infrastructure, distribution systems, and cold storage capacity have impeded the domestic market from fully satisfying demand.
In 1995, NAFTA implemented a special tariff rate quota for select pork products that increased the quota 3 percent per year and had a sliding tariff that would be phased out by 2003. During the first quarter of 2000, select pork products were assessed the 6 percent NAFTA tariff, but quota limits for the various pork categories were surpassed in April and May. These pork products are now assessed the 20 percent tariff until December 31, 2000. Even with the 20 percent tariff, pork imports for 2000 are estimated at 130,000 tons. About 85 percent of Mexico’s total pork imports come from the United States. However, Canadian pork is becoming increasingly competitive.
Mexico is also developing a pork export industry. Pork exports are forecast to rise to 40,000 tons as Mexico incrementally increases pork products to Japan, South Korea, and Central American countries.
Live hog imports for 2001 are expected to be down slightly from the previous year due mainly to the anticipated continuation of Mexico’s anti-dumping duty. On September 7, 2000, the United States and Mexico had WTO consultations on the hog anti-dumping duties. In late September, Mexico’s restrictive sanitary requirements that treated slaughter hogs over 110 kg the same as breeding hogs was revised. The new protocol may result in increased imports of slaughter hogs weighing more than 110 kg.
On the demand side, consumption is forecast to rise another 4 percent in 2001. The increase in consumption is fueled by improved disposable income and promotions by the pork industry.
EU
Pork exports for 2001 are forecast at 1.10
million tons, down nearly 4 percent from the previous year due to
cuts in the export subsidies. However, pork exports to Japan are
expected to expand as South Korea remains unable to supply pork
to that market due to South Korea’s FMD outbreak. In
addition, the EU will be targeting Australia, Singapore, and the
Philippines as potential market opportunities.
For the second year in a row, the EU exceeded its Uruguay Round (UR) volume ceiling on pork subsidized exports in 1999/2000 (July/June) by using unused quantities from previous years. This practice is explicitly forbidden for the 2000/01 UR year. As a result, the subsidized export volume ceiling will fall from an estimated 725,000 tons (1999/2000 UR year) to 443,500 in 2000/2001. This reduction has led the EU to negotiate "double zero" agreements with most applicant countries in Eastern Europe. These agreements offer larger tariff quotas for EU exports to Eastern Europe in exchange for EU commitments to reduce or terminate export refunds to the region. In July 2000, export restitutions for pork cuts were eliminated which should help the EU meet its commitments.
EU pork production for 2001 is forecast at 17.39 million tons, down 1 percent from the previous year. Belgium, France, the Netherlands, and the United Kingdom’s pork production are forecast to decline from 2000 levels; Germany virtually no change; and Spain and Denmark to increase slightly. Germany, Spain, and France are the major producers forecast at 4.10 million, 3.00 million, and 2.27 million tons, respectively. The decline is mainly due to a shrinking swine herd and lower slaughter levels as hog producers continue to adjust to the significant overproduction in 1998 and 1999. Lower prices and environmental constraints have generally caused farmers to reduce herd size. For Spain, however, increasing hog prices and decreasing feed costs versus last season are expected to increase the herd size for 2001. Spanish hog producers remain optimistic about the long-term prospects for the sector, believing that production will be increasingly transferred from northern Europe to mainland Spain. They feel they have a comparative advantage in hog production due to the dry weather, relatively large under developed area, and fewer environmental constraints than their northern European neighbors.
The EU Commission is expected to tackle pig welfare soon. Although animal welfare requirements are likely to affect EU production costs, long transition phases are anticipated and short-term production or export levels should not be influenced. Imports from third countries are so far left untouched by animal welfare measures. Transportation requirements could also be made stricter in the future for all livestock. This would affect mostly intra-EU trade, but could also have consequences on exports of live animals.
Japan
Japan’s pork imports are
forecast at 900,000 tons in 2001, up 2 percent from the 2000
estimate. Japan remains the world’s largest pork importer.
Demand for household table pork and processed products remains
solid, despite concerns that Japan’s lagging economy may
affect consumers’ purchasing power. The loss of both Taiwan
and Korea as suppliers of pork to Japan due to FMD has increased
market share for the EU, the United States, and Canada. However,
South Korea’s share of the Japanese market, mainly frozen
cuts, appears to have been replaced by the EU and Canada.
Consumption is forecast to increase slightly from 2.14 million
tons in 2000 to 2.16 million tons in 2001. 
Pork production in Japan stabilized due partly to the Regional Pork Funds, a domestic support program for pig farmers. This support measure effectively cushions the impact of low prices in the wholesale carcass markets in major producing regions. Each region is responsible for administering the funds of producer check-offs and the government contribution. The government allocated a total of ¥11.1 billion ($106.7 million) for the 6-year period from 1995 to 2000 to supplement the funds as one of the Uruguay Round-related domestic measures. With pork production stable, demand increases are all met through additional imports.
South Korea
In 2001, Korea’s pork imports are forecast at 70,000 tons, half of the level in 2000, and exports will likely be extremely small due to the FMD outbreak in March 2000. With most nations banning the import of South Korean pork and an anticipated increase in pork production due to herd liquidation, demand for imported product is limited. Nevertheless, South Korea is expected to import frozen cuts, mostly bellies, to meet high demand in the domestic market.
Pork consumption is forecast to increase 2 percent to 1.04 million tons in 2001 supported by an aggressive pork promotion campaign and a growing economy. Due to the ban by other nations on imports of Korean pork, ending stocks for 2001are forecast to increase sharply.
The Korean government is looking at possibilities to process pork for exports, particularly tenderloins to reduce inventory and mitigate the effect of oversupply due to FMD. Historically, tenderloins were exported to Japan and other countries. Although the pork industry is promoting tenderloins as ready-to-cook dishes in the domestic market, the domestic demand for the meat is not strong enough to make up the amount that was previously exported. Therefore, the government continues to look for markets overseas.
In August 2000, the Korean government announced that Hong Kong agreed to import Korean pork and pork products as long as the meat does not originate from regions affected by FMD. In the announcement, the Korean government noted that it will provide "transportation assistance" to increase pork exports. Since the announcement, the government has not clarified the type of the assistance.
Russia
Russia’s livestock sector continues to be stagnant. For the fourth consecutive year, Russia’s 2001 pork production is forecast to remain relatively constant at 1.49 million tons. As domestic production is unable to satisfy consumer demand, pork imports in 2001are forecast to increase 33 percent to 400,000 tons. An improving economic situation will enable Russia to purchase more pork than the previous year. In addition, as of July 2000 a reduction in the value-added tax from 20 percent to 10 percent on imported meat will help boost the import level.
For further information, contact Timothy Rocke, (202) 720-7715, or Yoonhee Macke, (202) 720-8252.
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