From #1 Importer to #1 Exporter
By Steve Meyer, Glenn Grimes and Ron Plain

The changes in U.S. pork trade in the past 20 years are impressive.  U.S. pork exports grew from 86 million pounds carcass weight equivalent in 1986 to 2.66 billion pounds in 2005.  Another comparison shows that net U.S. pork trade has gone from a negative 1.036 billion pounds (ie. a net importer) in 1986 to a positive 1.636 billion pounds (a net exporter) in 2005 (Figure 1).

The value of pork and pork byproduct exports grew from $1.97 per hog marketed in 1986 to $25.44 per head marketed in 2005, with pork accounting
for $22.01 per head and pork by-products
accounting for $3.43 per head. 

These changes in trade have permitted the pork industry to grow at an additional 0.8 percent per year on average over the last 20 years.  In other words, the U.S. pork industry was about 16 million head larger in 2005 than it would have been had pork imports and exports remained at 1986 levels. 

Not only has the increase in the quantity of pork traded allowed the industry to grow without lowering prices, but it has also added to producers’ incomes in the years

when net exports grew.  Our efforts to calculate returns to producers by year from 1986 to 2005 are in Table 1.  We believe these estimates are conservative because they show increases in producers’ incomes only in the year when net exports grew. 

   

In other words, we assumed producers reacted to higher prices by increasing the U.S. herd quickly enough to offset any price benefits from net export growth in the following years.  Some observers do not believe producers could react this quickly and thus feel that the benefits of net export increases last for more than one year.  If that is so, then we have undersTasted the total benefits of export growth. 

There are several reasons for this growth, and pork producers can take credit for many of them.   Among the contributing factors were: 

• Packaging and shipping technology that extended the shelf life of fresh chilled products and enabled the U.S. pork industry to carve out a high-value niche in the Japanese market.
   

• The Uruguay Round of trade talks that reduced tariffs and non-tariff barriers in many markets, including Japan.
   

• Leaner hogs that improved both product characteristics and costs of production and processing, thus making U.S. Pork products more competitive.
   

• An export mindset among U.S. pork producers and packers, who now focus on foreign customers’ needs instead of shipping them items that U.S. consumers do not value highly or at all.
   

• The North American Free Trade Agreement that reduced tariffs on U.S. pork products going to Mexico.
   

• Over $54.6 million of Pork Checkoff funding since 1987 that has been used to leverage federal and other funds, such as soybean checkoff dollars, to promote U.S. Pork to chefs, retail buyers and consumers around the world.

Japan is the largest U.S. pork customer, purchasing nearly 40 percent of our exports in 2005.  Mexico is second and Canada is third in tonnage purchased from the U.S.  Korea and China ranked fourth and fifth in the 2005 list of U.S. export customers.  Both markets hold great promise for future growth.

Three major groups in the U.S. have contributed to the promotion of pork exports.  They are USDA, the U.S. meat packing industry and pork producers.  No studies have been made that we are aware of to determine the amount of credit each of these groups should receive for increasing the growth in pork exports. 

However, we believe the total income of all U.S. pork producers has been improved by $6.3 billion over the last 20 years by the increase in exports (Table 1).  Less than 13 percent of this would be required to repay all the Checkoff contributions by producers during this period.

This study was funded by the University of Missouri and Pork Checkoff.