Outlook for Major Pork Importing Countries

Published: Feb 25, 2008

Introduction

Following is the third in a four-part series from the U.S. Meat Export Federation (USMEF) that examines key statistics and trends from the U.S. Department of Agriculture’s beef and pork trade outlook forecast for 2008 through 2017, which was developed in November 2007 and released last week. The USDA 10-year outlook is a scenario based on what would be expected to happen under a continuation of current farm legislation and specific assumptions about external conditions. It is not a forecast. USDA data is based on carcass weight equivalent (CWE) and does not include variety meats.

Highlights

The USDA’s 10-year outlook for the pork market offers this projection for the landscape of major pork-importing countries in the year 2017:

Largest pork importers: Japan, Russia, Hong Kong/China, South Korea and Mexico. Hong Kong/China moves from No. 5 to No. 3 pork importing region over the outlook period.
Largest growth markets:
- Russia (increase of 238,000 metric tons – 524.7 million pounds – or 28 percent)
- Korea (increase of 137,000 metric tons – 302 million pounds – or 30 percent)
- China (increase of 136,000 metric tons – 299.8 million pounds – or 105 percent)
- Mexico (increase of 131,000 metric tons – 288.8 million pounds – or 30 percent)
- Japan (increase of 100,000 metric tons – 220.4 million pounds – or 8 percent)

China

China’s pork imports are revised higher for 2007 in the new USDA forecast, showing a 44 percent increase over 2006 imports, which likely understates actual growth, according to Erin Daley, USMEF manager of research and analysis. “China’s imports increased beyond anyone’s forecasts,” said Daley. China’s imports are currently expected to increase by 15 percent in 2008 and another 12 percent in 2009.

China’s total imports in 2007 increased 116 percent according to statistics reported by the Global Trade Atlas (GTA), while Hong Kong’s total pork imports increased by 38 percent. Data from GTA includes variety meats.

For comparison, China’s imports are forecast to be about equivalent to Canada’s imports by 2010, and exceed Canada’s imports through the rest of the outlook period. However, both China and Canada are net exporters over the entire outlook period. China’s exports are nearly equal to China and Hong Kong’s combined imports. China’s exports are revised down slightly, but this year USDA revised the 2016 import estimate to 256,000 metric tons (564.4 million pounds), nearly five times larger than last year’s estimate for China’s pork imports in 2016.

Only a handful of countries can legally export pork to China, including the United States, Canada, Denmark, France, Italy (Parma Ham only) and Ireland. Despite the relatively strict access conditions, offal and pork by-products from a wide range of countries enter China, primarily via Hong Kong. In addition to the United States, Canada and Denmark, the largest suppliers include Brazil, Germany, the Netherlands, the United Kingdom, Belgium and Spain.

During 2007, the United States accounted for 44 percent of China’s and 5 percent of Hong Kong’s pork imports. When variety meats are included, the United States accounted for 26 percent of China’s imports (the European Union had 63 percent with France as the largest supplier) and 10 percent of Hong Kong’s imports (the EU had 46 percent followed by Brazil with 17 percent).

Pork continues to lead in China’s per capita meat consumption. The ratio of pork, poultry, beef, mutton and other livestock product consumption is 64 percent, 19 percent, 9 percent, 6 percent and 2 percent respectively.

For the nation as a whole, most pork intake is at-home consumption. However, China’s foodservice industry is growing rapidly (in excess of 15 percent per annum) and the frequency of meals consumed outside the household is increasing, especially in major cities. The number and diversity of restaurants is growing rapidly, and there is a proliferation of chain restaurants that constitute potential large end-users of U.S. pork.

U.S. pork products enjoy extensive nationwide distribution within China. It is believed that most U.S. pork offal products are utilized in catering. Very little U.S. and other imported offal is sold with a country of origin designation; i.e., in modern retail outlets.

There is a small but growing volume of U.S. foodservice pork items (e.g. bone-in loins, butts, jowl meat, riblets) utilized by higher-end foodservice establishments. Most of the outlets are Western, but also include Korean barbecue, hot pot/shabu-shabu, and some Chinese restaurants. USMEF works with these outlets to feature U.S. pork on menus as a premium foodservice offering.

Mexico

Mexico’s imports were reduced in 2007 and over the outlook period, with a slow recovery of 2006 import volumes (by 2013 which is similar to USMEF estimates). Mexico’s self-sufficiency is expected to increase from 77 percent to 79 percent in 2008 due to an anticipated 4 percent increase in domestic production. The United States dominates Mexico’s pork imports with 87 percent to 90 percent market share. Canada is the second largest supplier, followed by much smaller volumes from Chile. Mexico consumes much less pork than either poultry or beef. Of combined beef, pork and poultry consumption during 2007, poultry accounted for 43 percent, followed by beef with 36 percent and pork with 22 percent.

USMEF is promoting U.S. pork in Mexico through a variety of programs, including seminars for small trading companies, boutiques and butcher shops to increase distribution in an effort to regain and surpass 2006 export volumes. USMEF estimates a recovery of 2006 export volumes during 2012, similar to USDA’s estimate of 2013.

Japan

Japan remains the largest pork importer in the world over the outlook period, with 2017 imports totaling 1.3 million metric tons (more than 2.8 billion pounds) compared to 1.2 million metric tons (more than 2.6 billion pounds) estimated for 2007. Half of Japan’s pork is imported, according to USDA estimates. The United States is the largest supplier to the Japanese pork market, with 38 percent market share during 2007, followed by the European Union (EU-25) with 25 percent (mainly Denmark), and Canada with 19 percent.

China exports processed sausages to Japan, accounting for 7 percent of total pork imports. Mexico and Chile benefit from bilateral trade agreements with Japan, and they each account for about 5 percent of Japan’s total pork imports. Although competition is fierce, the United States’ export market share has increased from 33 percent in 2005 to 38 percent during 2007. USMEF expects 3 percent annual growth in U.S. pork exports to Japan while USDA expects 1 percent annual growth in Japan’s total pork imports from all suppliers.

The United States could continue to increase market share, but Japan’s total pork imports are likely to increase at a higher rate if domestic production continues its long-term decreasing trend. High feed prices, aging farmers and impacts of a potential Doha agreement could all result in lower domestic pork production. Pork is the most popular meat in Japan, excluding seafood, with per capita consumption at 20 kg per capita (44 pounds) compared to poultry and beef at 15 kg (33 pounds) and 9.5 kg (20.9 pounds) per capita respectively (carcass weight equivalent). Seafood consumption is declining due to high prices. From 2000 to 2005, consumption fell 14.4 percent while pork consumption increased 12 percent, beef fell 11 percent (due to BSE in domestic herd followed by U.S. case) and chicken consumption increased 1 percent.

High value pork items, including chilled loins, account for significant volume and value of U.S. exports to our leading market. USMEF Japan conducts a variety of programs to promote high quality U.S. pork as an everyday menu item, including cooking schools using celebrity chefs to teach housewives how to prepare U.S. pork.

South Korea

USDA nearly doubled its pork import forecast for South Korea in 2007 imports. It projects a 6 percent increase in 2008, followed by 4 percent and 3 percent growth in 2009 and 2010, and then imports are projected to increase by 2 percent annually through 2017. South Korea is currently about 70 percent self-sufficient in pork production but, like Japan, self-sufficiency will likely continue to decrease as farmers face higher costs of production. The Korea-U.S. Free Trade Agreement (KORUS FTA) would provide duty-free access to most U.S. pork items by 2014 regardless of the implementation date. The USDA forecast, which is based on current policy, does not assume approval of the KORUS FTA.

The EU is currently the largest supplier to South Korea with 42 percent market share, followed by the U.S. with 26 percent, Canada with 18 percent and Chile with 13 percent. The KORUS FTA would essentially put U.S. pork on a similar duty reduction schedule as the Chile-Korea FTA with both countries receiving duty-free access in 2014. The EU primarily supplies single-ribbed bellies to the South Korean market while top U.S. items include picnics and Boston butts.

To defend and increase U.S. market share in South Korea, USMEF Korea has targeted BBQ restaurants and is educating staff about belly, collar butt and spare ribs. It worked with restaurants to prepare for COOL regulations at the restaurant level by helping chefs understand the benefits of serving high quality U.S. chilled pork.

Russia

Russia provides strong domestic support to its pork industry, but it still is only 70 percent self-sufficient. Brazil is the largest supplier with 47 percent market share, followed by the EU with 32 percent, and the United States and Canada each account for about 10 percent. The EU benefits from access to the largest country-specific tariff rate quota (TRQ) of 249,000 metric tons (548.9 million pounds) compared to the U.S. TRQ of 49,800 metric tons (109.8 million pounds). Brazil utilizes the “3rd country TRQ” (193,400 metric tons in 2008 – more than 426 million pounds) and benefits from preferential developing country duties of 11.25 percent compared to 15 percent paid by other major suppliers. Pork consumption in Russia is about equivalent to poultry consumption at 19 kg per capita (41.8 pounds) while beef consumption is nearing 17 kg (37.4 pounds) per capita. Much of the pork consumed in Russia is processed. Therefore common U.S. export items include frozen picnics, trimmings, and hams. One example of a USMEF promotion in Russia is a Pork Festival in St. Petersburg, where journalists and chefs attended a master class.

USMEF forecasts reflect uncertainty regarding Russia’s TRQ system after 2009. Currently, the weak dollar and plentiful U.S. pork supplies are enhancing U.S. competitiveness versus Brazil in the Russian pork market. However, it is difficult to forecast exchange rate fluctuations, and it is unknown whether Russia will continue its TRQ system after 2009. These and other factors will impact U.S. pork competitiveness in the Russian market over the outlook period.

Next: Major Beef Importing Countries

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The U.S. Meat Export Federation (www.USMEF.org) is the trade association responsible for developing international markets for the U.S. red meat industry and is funded by USDA, exporting companies, and the beef, pork, corn, sorghum and soybean checkoff programs.