South Korea is a bright spot in the pork export situation, but the difficult trade environment with China has offset those gains. National Pork Board vice president of international marketing Craig Morris offers insight into the latest export figures and opportunities for growth.
Craig Morris, VP of International Marketing, National Pork Board
Don Wick: 00:05 From the Pork Checkoff in Des Moines Iowa, it’s Pork Pod. Pork Pod, a look at the hot topics in today’s pork industry. The Pork Checkoff is working for you through various forms of research, promotion, and consumer information projects. I’m Don Wick speaking on behalf of the Pork Checkoff, and today our guest is Craig Morris, Vice President of International Marketing for the National Pork Board, and the latest export numbers are out for the month of May. Craig, from the pork industry’s perspective, what did we learn?
Craig Morris: 00:33 Well we’ve really got a mixed picture for May. Total US exports of pork for the month were 174,000 metric ton, which is almost exactly the same as last year. While shipments to a number of markets were higher, unfortunately those increases were really offset by a very sharp reduction in exports to China. South Korea remains our big bright spot in 2018. We had fully 21,000 metric tons for the month of May. That’s 40 percent higher than a year ago, so South Korea has really been the shining star for us in 2018. The value of our exports to South Korea was over $59,000,000, which is 41 percent higher than a year ago. Mexico was also strong in May, but we have to remember that that is the last month before the 10 percent tariffs kicked in on June 5th. So for May, we were 59,000 metric tons. That’s five point six percent higher than a year ago. And as we know, Mexico is our largest market for US pork and a huge market for, quite frankly, for where we try to ship our hams.
Don Wick: 01:37 Are we seeing any differences in these markets with the muscle cuts versus variety cuts?
Craig Morris: 01:46 Yeah. Variety meat exports this year have been really off. They were lower in May again, total shipments of pork variety meats for the month were 37,000 metric tons. That’s 11.6 percent lower than a year ago. Shipments to China only coming in at 9,000 metric tons. That’s 37 percent less than a year ago. The export value of pork variety meats in May is down fully 16 percent from a year ago. So variety meats are really struggling this year, uh, in large measure because of our struggles with the Chinese market.
Don Wick: 02:15 You mentioned China and also the duty situation with Mexico. Obviously we’ve got some, some challenges there. What’s being done with the Pork Checkoff and USMEF to really get that message out about the US product, in light of what’s going on in the trade disputes?
Craig Morris: 02:36 Well, I just returned from the Latin American showcase down in the Dominican Republic and that is our largest exporter showcase for basically South America, Central America and Caribbean. So it’s really all of Latin America, ex-Mexico, and definitely the message for us down there, and it was a record attendance, was that this is going to be a great period to buy US pork. And so we’re going to do everything we can, not only in those large markets that we’ve got, like Columbia and Guatemala, but a whole basket of markets down there that we brought in some, I think we had 54 exporters and an attendance of about 370 people all building on that message that, you know, South America for us this year is up 26 percent by volume and 26 percent by value. So South America has been a booming market for us this year and we’re going to probably, because of these tariffs, have a near term buying opportunity for that market. And that’s really the message that we’re having for them.
Don Wick: 03:33 So South America, Central America, both the new keys or new important markets for the US. As far as the demand, are they looking for certain, looking for a certain product or what are we finding there, Craig?
Craig Morris: 03:49 Well, as we know, about half the hams produced in the United States we export. Overwhelmingly, Mexico is the largest market for that. That’s about 40 percent of US ham production goes into Mexico. We’ve made it clear that in the near term, 10 percent tariff is what we dealt with and through July 5th, we’ll see those numbers come out next month in terms of, of what really happened there. We don’t think its 10 percent that’s going to really be able to affect the competitiveness that we have for those fresh bone-in hams going into that market. The 20 percent you don’t know. We do know that Mexico had a team down in Brazil looking at their food safety systems in that country to determine whether or not Brazil can start shipping hams into Mexico. We also have heard that Europe has started landing some hams into the Mexican market, which are obviously things that give us pause. We have about 90 percent of all pork imports into Mexico come from the United States. And so we are the dominant player in that market and I’m sure because of the trade tensions, Mexico’s looking to diversify that supply. We think even at 20 percent tariffs, we will be a very large supplier into that market. But we want to make sure we’re doing everything we can to market those hams if Mexico becomes the issue in the near term for diversification into those markets like Columbia, Central America, the Caribbean.
Don Wick: 05:14 Certainly the quantity product and the logistics of just their proximity have to be important when we, when we think about Mexico?
Craig Morris: 05:20 Absolutely. I was in Mexico here about a month ago and when we went into the plant, they’re honestly not even set up to bring in frozen products from abroad and temper that product out. They really are set up for just-in-time delivery of US fresh product. They’ve got the employees standing there at the ready when the truck backs up to pull those hams off and start boning them right out and turning them into processed meat products there in Mexico. So we offer a ton of logistical advantages. Clearly though, when we start talking about 20 percent tariffs, those are issues that could affect producer returns here at home. So it is going to be important to make sure that we’ve got other markets out there bidding for that same product. You know, the big thing that we got to remember right now is South Korea. South Korea has just been stunning for us in terms of the year. We’re up 44 percent by volume, 54 percent by value this year in South Korea. It has just been an amazing market for us, but we can’t overstate, China has just become a real struggle for us in the near term. Our shipments to the Chinese market in May were 46 percent lower than a year ago. At Hong Kong, 65 percent lower. So clearly the signal’s been sent in that market that a US product is going to face some headwind.
Don Wick: 06:42 Craig Morris from the National Pork Board. Thanks to you for listening to this edition of Pork Pod. For more information on this topic or the Pork Checkoff itself, visit pork.org.