US Pork International TradeBecca Hendricks, AVP International Marketing, National Pork Board

Why Do We Export?

It’s a Big World

• 96% of the world’s population lives outside of the US

• Pork is the world’s most consumed animal protein

• US and EU compete as largest global exporters

• 26% of U.S. production

• We export a lot of products we don’t typically consume

What Do We Export?

International Primal Cut Utilization

International Variety Meat Utilization

Where Do We Export?

2013 Year-end Exports

• Sold to over 100 countries

• $6.05 B, ↓4% from 2012

• 4.73 B lbs, ↓5% from 2012

• Challenges:

– High supplies in importing countries

– Trade access and barriers

– Strong competition

– Strong dollar

Source: USDA statistics

Top Export Markets: Q1 2014

Mexico ↑22%Japan ↑11%China/HK ↑9%Canada ↓18%Korea ↑15%C/S Am ↑36%ASEAN ↑52%Oceania ↑11%

Japan ↓1%Mexico ↑36%China/HK ↑19%Canada ↓6%Korea ↑21%C/S Am ↑41%Oceania ↑17%ASEAN ↑51%

Volume Value

Source: USDA statistics compiled by USMEF, compared to 2013

• Record-high prices…yet:– $1.649 B, ↑11%

– 1.286 B lbs, ↑11%

– March ↑29%

• Value=$69.93/head

• 31.5% of production

How Does the Industry Work Together?

Industry Partners in Trade

• National Pork Board

• National Pork Producers Council

• US Meat Export Federation

• State Pork Associations

• State Soy and Corn Associations

CI #2: Enhanced Demand

0

150,000

450,000

750,000

1,050,000

1,350,000

1,650,000

1,950,000

2,250,000Metric Tons

Canada FTA

NAFTA(Mexico)

WTO Uruguay Round(Japan & South Korea)

U.S. -Taiwan Pork Deal

ChinaWTO Accession

Russia Pork TRQs

Australia FTA

DR -CAFTA

U.S. -KoreaU.S. -ColombiaU.S. -Panama

Impact of Free Trade Agreements

Dermot HayesPioneer Chair in Agribusiness

Iowa State University

The importance of trade Recent export data Trends in key countries Reasons to be optimistic about export

growth A few slides about China Ongoing free trade agreements with Japan

and the EU

Suppose Iowa closed its borders to all agricultural trade, think of what life would be like

Now assume 100 year passes, will voters want to open the borders?

A giant sucking sound as labor intensive jobs in tropical plants, cotton and fruits leaves the state

The job of the economist is to show that Iowa would be better off allowing free trade with other states, this can be an unpopular position

OPEN to Trade USA Canada EU Singapore Australia/New Zealand Chile Colombia Central America

Closed to Trade Cuba North Korea Argentina Venezuela Bolivia Russia

US Pork & Pork Product Exports

Calendar Year: 2011 - 2013

Partner Country UnitQuantity % Change

2011 2012 2013 2013/2012World T 2328492 2335981 2228051 - 4.62Mexico T 579793 639808 669762 4.68China/Hong Kong T 497119 442979 433253 - 5.57Japan T 493721 457270 428091 - 6.38Canada T 205221 236310 227909 - 3.55Korea South T 190237 154278 102017 - 33.87Australia T 64963 68272 54135 - 20.71Philippines T 42458 42125 53804 27.73Colombia T 11422 19740 34872 76.65Chile T 13146 17569 25523 45.27Honduras T 19547 20218 22495 11.27Dominican Republic T 13950 15743 18850 19.73Taiwan T 27130 18097 18566 2.59Singapore T 10370 8777 17391 98.14Ukraine T 4087 2428 14663 503.79Panama T 5808 8474 13544 59.83Guatemala T 10433 13094 10655 - 18.62New Zealand T 6422 8991 8434 - 6.19Russia T 70287 94235 5805 - 93.84Peru T 1423 2284 5517 141.54

US Pork & Pork Product Exports

Calendar Year: 2011 - 2013

Partner CountryUnited States Dollars % Change

2011 2012 2013 2013/2012World 6279866448 6518892092 6287790163 - 3.55Japan 1964591503 1990556038 1895989331 - 4.75Mexico 1108418756 1203807900 1319305460 9.59China/Hong Kong 964500987 933847017 965811090 0.26Canada 742063097 862221265 848736452 - 1.56Korea South 501918336 431999404 284166096 - 34.22Australia 209448922 214069401 180817410 - 15.53Philippines 97347444 94657874 119252750 25.98Colombia 29003994 54177245 89947897 66.03Chile 29434779 44164402 65795572 48.98Honduras 47523431 46636302 52786591 13.19Singapore 27934681 26410772 45209729 71.18Dominican Republic 33497372 36129253 43730100 21.04Ukraine 10584418 5129141 42060352 720.03Taiwan 54280522 41466718 41916098 1.08Panama 13538707 18858881 29860338 58.34Guatemala 24109785 29220493 27779715 - 4.93New Zealand 20045899 26726199 25142798 - 5.92Russia 219033732 271281812 18094013 - 93.33Netherlands 12030688 16265529 17848695 9.73Costa Rica 6552518 8119644 14065419 73.23Bahamas 14106786 12313821 12799478 3.94Peru 2840184 5117160 12082527 136.12

The US exports 24% to 27% of pork production

Iowa produces about one third of US slaughter hogs, this equates to $2 billion in pork exports or $666 for every person in the state

When we lost the Russia and Chinese markets in March of 2013 the price of hogs fell by almost $20 per animal

US Pork & Pork Product Exports

Year To Date: January - March

Partner Country UnitQuantity % Change

2012 2013 2014 2014/2013World T 616173 547861 603579 10.17Mexico T 171966 146066 178746 22.37Japan T 123083 109006 121068 11.07China/Hong Kong T 118941 109158 116228 13.47Canada T 55977 58280 48027 - 17.59Korea South T 54673 35671 40814 14.42Australia T 19794 16969 19279 13.61Colombia T 3404 5396 14411 167.08Philippines T 8597 13314 11968 - 10.11Singapore T 1794 1882 10566 461.45Chile T 5088 5264 5260 - 0.07Dominican Republic T 3559 3809 4490 17.89Honduras T 5355 5085 4061 - 20.15Taiwan T 6374 5617 3906 - 30.45Guatemala T 3085 1955 2730 39.61New Zealand T 1978 2586 2249 - 13.04Peru T 264 618 2013 225.89Costa Rica T 350 837 1805 115.54Panama T 1578 3549 1551 - 56.29Ukraine T 504 2787 1322 - 52.57Trinidad & Tobago T 1537 989 1260 27.42El Salvador T 585 561 1180 110.44

US pork production could fall by 4%-6% this year due to PED, this has increased pork prices and will cause US consumers to buy less pork and more chicken

Japan, Mexico, Korea, Canada, Colombia and several other countries also have PED, this will increase their import demand

The EU has a surplus of pork available for export because Russia has banned imports due to CSF

Many of our export customers buy products that are not popular in the US and this demand is not price sensitive

Best guess: exports will be 4% to 6% lower than would otherwise have been the case

Mexico: economic prosperity allowing for an improved diet, pork imports up, domestic pork production stable

Japan: aging population and domestic supports mean stagnant imports, we are losing market share to Mexico and Chile

China/Hong Kong: unbelievable potential, could allow the US to double pork production, recent sales of US chilled pork is a huge story

Canada: MCOOL reduced the flow of Canadian pigs into the US and of US pork into Canada

South Korea: imports growing again after FMD disruption (lessons learned)

Australia: FTA access for corked pork only successful domestic campaign against imports

New Zealand: recent success may be limited by FSIS interpretation

Colombia: a text book success story for both countries

Also for DR, Honduras, Guatemala, Costa Rica Panama, El Salvador, Peru

From INTERPIG, a Detailed Benchmarking Study

Aggressive, ambitious negotiations between Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam

Bilateral talks between Japan and the US over agriculture (Abe, Obama)

Japan is also negotiating FTAs with Canada, EU and Australia

Wall Street Journal reported a 10 year phase-in to a $0.22/lb import duty on pork with funds to be used to support Japanese pork producers

Huge decision for US pork industry

Suggested as a way to stimulate the economies of the EU and US

General willingness to reduce duties EU is intransigent on non-tariff barriers such

as anti-GMO and anti-growth promotants EU consumers have lost faith in regulatory

science because of past failures Enormous US export opportunity for

processed pork if the deal goes through