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Pork Exports Rocket Up, Look Promising in 2012

posted on March 9, 2012


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More encouraging news on the economic front this week as the government reported the strongest three months of job growth since the Great Recession.

The Labor Department reported Friday that U.S. employers added a net 227,000 positions to their payrolls in February.  The unemployment rate was unchanged at 8.3 percent. 

The exuberance was tempered, however, by a separate report Friday revealing the U.S. trade deficit surged in January to its highest level in more than three years.      Imports hit an all-time high, reflecting big demand for foreign-made cars, computers and food products, while U.S. exports to Europe fell, raising concerns that the debt crisis in that region could dampen U.S. economic growth.

Those seeking POSITIVE trade data, however, needn't look further than the American livestock sector.  Global demand pushed U.S. pork, beef and lamb exports to record highs last year.  And that's bolstering hopes -- especially among pork producers -- for a repeat in 2012.

U.S. pork producers had a banner year in 2011 and could be headed down that same path again in 2012, according to recent USDA data.

Pork export volume last year topped 2.25 million metric tons, beating a 2008 mark by 10 percent. Export value topped $6 billion, a nearly 28 percent increase.

Exports to China, a developing market for U.S. pork industry, soared nearly 200 percent last year.

Analyst Steve Meyer of Paragon Economics based in Adel, Iowa believes rising standards of living are a substantial factor in the booming export market.

Steve Meyer, President, Paragon Economics: “Growing middle class and pork is the meat of choice in China, it’s a staple in their diet, and they had some production problems, they’ve had those for some time especially with some disease losses. That has increased the price of pork there. The government was very interested in trying to control price inflation so they were open to more exports.

Meyer adds any percent increase spread across 1.3 billion Chinese people is good news for U.S. producers.

The 2008 spike in exports to China was attributed to the run up to the Olympics. Four years later, expanding markets, and visits to the U.S. by Chinese officials, are boosting prospects. 

Steve Meyer, President, Paragon Economics: “China has to be comfortable that we’re a dependable supplier. I mean, they have to be because this is such an important part of their diet they can’t start depending on someone they have the least doubt about. So, I think those kind of friendships can only help us.”

Despite rapid growth in China, Japan is still the top destination for American pork, with shipments approaching 5 million metric tons annually. Mexico is the second-largest market for U.S. pork exports, but demand dipped slightly last year, due to the weaker Peso.

The U.S. dollar has strengthened in recent months. But Meyer believes the greenback hasn’t risen enough to seriously hamper pork exports.

Steve Meyer, President, Paragon Economics: “A stronger dollar is far from a strong dollar and if we look at it relative to history, the dollar is historically weak, and I think it will stay there. I don’t see the dollar strengthening enough to really harm our position in exports.”

And that, according to Meyer, prompts celebration over a job well done and confidence in the future.

Steve Meyer, President, Paragon Economics: “2011 was a culmination of years of hard work in opening markets and developing relationships, and we had the product at the right price to sell to people in other countries. 2012, if we can maintain our performance of 2011, that’s going to be a victory. We were up 24%, I think, last year. So, it’s hard to follow that with even a positive number and if we can maintain it, it will be a good year. But I think there is nothing but growth, should the industry choose to grow, there’s a little question about that, a lot of risk in having that much product going overseas. There’s some question, it’s kind of tempered with the opportunity for growth. I think you’ll take that.”

    


Tags: China dollar economy exports farmers Japan Mexico news pork Steve Meyer USDA