Addressing USMEF members at the organization’s strategic planning conference in Tucson, Ariz., President and CEO Dan Halstrom said improving market access conditions and strong global protein demand present a very positive outlook for U.S. red meat exports in coming months.
Coming off a record year in 2018, USMEF projects U.S. beef exports to finish the year slightly higher in volume at 1.36 million metric tons (mt), with a 2% increase in value to $8.51 billion. In 2020, exports are projected to climb another 4% in volume to 1.42 million mt, valued at just over $9 billion (up 6%). The forecast for pork export growth is even more bullish, with exports projected to achieve double-digit increases this year and next, exceeding 3 million mt in 2020 valued at $8.34 billion.
Halstrom’s optimism is bolstered by the recently signed U.S.-Japan trade agreement, which will bring tariff rates for U.S. beef and pork in line with those imposed on competitors’ products.
“We’re going to be talking a lot about China at this conference but in my mind there’s nothing bigger than this agreement with Japan,” he said. “U.S. beef and pork are at a considerable disadvantage in our largest and most reliable market, and we are seeing market share slowly erode. So getting our products on a level playing field is essential, and the best news I’ve seen in several years.”
Market access improvements may also be coming in China, as U.S. and Chinese negotiators are said to be close to completing an agreement that will reduce barriers for U.S. agricultural exports. The terms of this agreement have not yet been announced, but Halstrom noted the upside potential for China is enormous, especially given the effects of African swine fever on its domestic pork production.
“As I’m sure you have all heard in the press, China’s pork deficit is so large that the world not only can’t supply enough pork to make up the deficit, the world cannot supply enough protein to make up the pork deficit,” Halstrom said. “I would argue that this is a once-in-a-lifetime event that shapes and affects protein flows around the world, including in the United States. Right now our pork and beef exports to China are growing despite very high retaliatory duties, but imagine what they could be if duties were on par with our competitors. It would be phenomenal and change the dynamics overnight.”
Halstrom noted that the U.S. and European Union have agreed to a U.S.-specific share of the EU’s duty-free high-quality beef quota, which is administered on a quarterly basis.
“This will allow us to supply beef to European customers in all 12 weeks of each quarter, where today we can only supply for four to five weeks before the quota is exhausted,” he explained. “The agreement still needs approval by the EU Parliament, but it appears to be moving forward with a goal of being implemented Jan. 1.”
Halstrom also stressed the importance of bringing the U.S.-Mexico-Canada Agreement to a ratification vote. He noted that Mexico and Canada are especially valuable markets for the U.S. red meat industry because the product mix exported to those destinations differs significantly from most U.S. exports to Asian markets.
“From a carcass utilization standpoint, Canada and Mexico complement our Asian markets perfectly,” Halstrom said. “I hate to think what round prices would be if not for Canada and Mexico, because we don’t sell many rounds to Asia. On the pork side, there are some hams exported to Asia but it’s not the primary item. Hams are the No. 1 item going to Mexico and pretty high on the list for Canada.”