The world loved US beef until a wayward Canadian cow with BSE wandered into a Washington state feedlot and destroyed the US beef export business on her own. Then the world discovered US pork, and ate so much of it in the past year that export demand pushed pork producer revenue up to almost the level of profitability. Of course a recession-scared global economy sudden does not have the money to buy meat. But will international meat trade recover to the benefit of the US livestock producer?

Red meats crisscross the world, connecting producers and consumers, if governments can agree on prices, product quality, and lower trade barriers enough to feed hungry consumers. And that is a mouthful as explained by USDA economists in the latest Meat Trade Outlook.

As grain producers know, the value of the dollar has had a lot to do with export trade, and when it was weak the past several years, meat exports were relatively high. Since 1970, US consumption of meat has grown 20%, but most of that has been consumption of imported meats. US consumers have consumed gradually less domestic meats in the past 10 years. But since 1970 the quantity of US red meat to be exported has increased more than 3,200%, including beef and veal by 2,700% and pork by 3,500%. USDA says 75% went to just Canada, Mexico, Russia, South Korea, and Japan.

The growth of meat trade depends on the type of meat and USDA says there are different dynamics that control demand.

US Beef enjoys the reputation of a high value product and exports increased steadily until the BSE issue in 2003. Lower quality, grass fed beef is used in processed meats which is a significant import, primarily for hamburger.

US pork exports are a function of cost and concentration of the industry has reduced production costs to the point that pork exports are competitive in many global markets. Currently, Canada supplies many imports of live hogs coming into the US for immediate or later slaughter.

Lamb exports are minimal, and usually of lower quality meats. However, the domestic market consumes high quality lamb produced in the US, along with a substantial amount of imported lamb meat.

Some of the export volume can be traced to the presence of trade agreements, such as the 1988 agreement with Japan that eliminated quotas on US beef. NAFTA expanded US meat access to the Canadian and Mexican markets by reducing tariffs and phasing out other barriers to US red meat.

Another incentive or barrier to foreign demand for US meat is the exchange rate, as well as the exchange rate for US competitors in the global meat markets. For example, prior to 2006 the currencies of Canada, Australia, and New Zealand were fairly stable in relation to the US dollar. Then the Canadian dollar depreciated in value, allowing US consumers to buy more for less and Canadian beef imports were in an uptrend. As the Canadian dollar appreciated in value the past several years the meat trade leveled off.

Pork is another story. US pork imports are primarily from Canada, and to a lesser amount Poland, Denmark and Hungary which are in the European Union currency system. The Euro is tightly controlled, but has strengthened in recent years against the US dollar. The USDA economists say when the dollar recently weakened pork imports became more expensive, but the European changes in the exchange rate may be a “significant determinant in fluctuations in trade of pork products.”

A detriment to meat trade is disease, and the BSE issue eliminated about one billion pounds of US beef that would have been sold abroad. On the other hand, pork exports have expanded in part due to the beef issues, as well as with concerns about Avian influenza in poultry meat.

The USDA economists conclude that expanding global economies will result in a robust income growth that will expand consumer demand. They report that the US is exporting more and importing more as well.

Summary:
The overall growth of US meat exports has approached 3,000%, which have been high value cuts of beef and a variety of pork meat. However, the strong business is dependent upon consumer perceptions of value and prices, staying away from disease issues such as BSE, and food safety concerns.