U.S. beef and pork producers had a banner year in 2011, setting annual sales value records for both commodities through October, with two full months to go.
The most surprising thing about the sales records is that 2012 could be even better for beef and pork with a number of positive trade moves reported with Mexico, South Korea, Colombia, Panama and Russia.
Mexico is a huge market for both commodities, and the resolution of the U.S.-Mexico trucking dispute should keep the market open and flowing freely. January through October pork sales to Mexico totaled 429,926 metric tons valued at $830.6 million.
U.S. beef producers found their top volume market in Mexico with sales of 213,004 metric tons worth $818.2 million during the first 10 months of the year. U.S. trade officials say they are working to open up the North American Free Trade Agreement partner’s market even more for U.S. beef. They want Mexico to drop prohibitions against ground beef and beef from animals older than 30 months.
South Korea continued to be a top and growing market for both beef and pork, and ratification of a free trade agreement will reduce tariffs for U.S. commodities, encouraging more sales.
Tariffs on U.S. beef imported by Korea will drop from 40 percent to zero over 15 years, and duties on U.S. pork, which range from 22.5 percent to 25 percent, will be phased out over two years starting Jan. 1, 2014.
During the first 10 months of 2011, South Korean consumers bought 129,810 metric tons of U.S. beef, an increase of 43 percent from the same period in 2010. The beef was valued at $574.9 million. Sales of U.S. pork to South Korea were even more impressive, jumping 133 percent to 161,118 metric tons valued at $418.1 million.
“The free trade agreement with South Korea, which should take effect in the first half of 2012, will expand our opportunities with this key trading partner,” said Phillip Seng, president and CEO of the U.S. Meat Export Federation. “It is important to keep in mind, however, that the business climate for imported pork in Korea has been exceptional this year due to FMD-related shortages and some degree of duty-free access. So the benefits of the FTA may not be reflected immediately, but will certainly help us over the long term.”
The USMEF estimates the U.S.-South Korea FTA would boost U.S. beef exports to more than $1 billion per year over the 15-year implementation period, up from $518 million in 2010. For pork, exports would more than double (from 2010 value) to more than $400 million by 2016. Korea is currently the fourth-largest value market for both U.S. beef and pork exports.
Ratification of the Colombia and Panama FTAs would add an estimated $25 million in pork exports by 2016 and about $35 million in beef exports, the Denver-based USMEF said. The group said signing trade agreements isn’t only about gaining new market share, but also preserving markets that already exist.
The export promotion group also touted Russia’s entry into the World Trade Organization as a potential boost to trade, saying the WTO will provide a venue for addressing trade disputes.
Despite Russia’s WTO membership, U.S. pork and beef exports will still face significant obstacles selling into in the country, including a quota system that regulates imports through the imposition of steep tariffs beyond a designated volume, according to Thad Lively, USMEF senior vice president.
For U.S. producers, it is a market worth pursuing: U.S. pork exports to Russia were up 15 percent in value from January through October to $206.1 million, although volume dropped 11 percent to 66,586 metric tons. Beef sales to Russia were up 29 percent in volume to 63,969 metric tons from the sale period in 2010, while sales were up 66 percent to $222.3 million.
The meat industry isn’t the only one welcoming the burgeoning trade opportunities. The American Farm Bureau Federation said the trade agreements with South Korea, Colombia and Panama should boost sales of U.S. farm products by $2.5 billion a year.
“The South Korean trade agreement allows for immediate elimination of tariffs on American-grown asparagus and certain kinds of tomatoes, the Panama agreement will lead to the elimination of tariffs on almost all fruit products, and the Colombia agreement will do away with most barriers to trade for U.S. products,” said Robert Guenther, senior vice president for public policy at United Fresh Produce Association.
Contact Stephanie Nall at email@example.com.