Though often still holding their breath, American red meat exporters can expect continued growth in overall sales abroad, setting records by both volume and value this year, topped by further records in 2020.
That’s the market outlook Dan Halstrom, president and CEO of the U.S. Meat Export Federation, described at the federation’s recent planning conference in Tucson, Ariz.
Surprisingly, market growth continues unabated after recent years of disruption on many fronts in America’s major farm exports markets, including the 2017 U.S. exit from the inked Trans-Pacific Partnership, President Donald Trump’s ongoing trade war with China, a threatened exit from the North American Free Trade Agreement and its replacement awaiting action in Congress, among other challenges.
“We’ve had a lot of tension on a lot of fronts in virtually all (meat animal) species,” Halstrom said. “I would argue today that we still have the volatility, especially with regard to China. There’s a lot of moving parts with China.”
“But we’re starting to feel tail winds on some issues versus all headwinds,” he said.
Dan Halstrom, USMEF
Based, in part, on USDA data, USMEF projects foreign sales of pork products will exceed 2.7 million metric tons (mmt) this year, up 12% over 2018, and then jump to 13% in 2020, to 3.1 mmt, coming to $8.3 billion by value.
It projects a beef exports record this year at near 1.4 mmt, rising 4% more in 2020, reaching $9.1 billion by value.
Lamb meat exports for 2019 are in a rally, too, and will reach 16,000 metric tons (mt), more than doubling since 2017.
Halstrom addressed major components of the relentless U.S. red meat export market:
- Although U.S. and Chinese officials are still wrestling toward an initial deal to ease their trade war, a USDA Foreign Agricultural Service official involved in the negotiations advised a USMEF committee that "we're very close" to a deal. Meanwhile, the tonnage of American meat to China continues to mount, and that’s despite China’s duties of 72% on U.S. pork and 42% on beef. “The business is still growing; even with the duties,” he says.
- The fundamental driver behind that growth is the African swine fever (ASF) epidemic that has killed up to half of China’s pigs and has invaded herds in Vietnam, South Korea, and the Philippines. China is by far the leading pork consuming country, and China’s pork deficit “will have an impact that will be … a five-year to 10 year phenomenon, no one really knows. Demand is going to increase globally on all proteins,” Halstrom says.
- Trump inked a trade deal in September with Japan, which will include phasing in lower tariffs on beef and pork. Japan is the top U.S. meat export market by value, at $3.7 billion, Halstrom says, so “there’s nothing bigger than this agreement we’re about to embark on with Japan,” and he notes the U.S. absence from the TPP is eroding the U.S. market share in Japan. He says approval of the deal in the Japan Diet is expected by early December, with implementation starting in January.
- Exporters are also holding their breath, hoping for congressional approval of the U.S.-Mexico-Canada Agreement (the NAFTA replacement), which Halstrom declares as “essential … to provide stability to the supply chain” in meat trade with the U.S. neighbors.
- Expected to firm up soon, too, is an agreement the U.S. inked with the European Union in August establishing an expanded duty-free tariff rate quota (TRQ) exclusively for the United States. The current TRQ, at 13,000 mt a year, will sell up to 18,500 metric tons in 2020, and gradually to 35,000 mt annually in seven years — nearly tripling, yet still a small slice of U.S. beef exports. Erin Borror, USMEF economist, says to expect a series of EU committees and the EU Parliament to approve the deal by year’s end, with implementation in 2020.
In general, Halstrom says, expect to see “a lot of broad-based growth in a lot of countries — Mexico, Japan, (South) Korea, central and South America; the list goes on.”
Even in the petite U.S. lamb export market, he said, "we’re looking at dramatic growth in 2019 … up 31% through September; to Mexico, Canada, the Caribbean, and Central America,” plus new “high-end (market) potential in Taiwan and Japan,” owing to recent opening of access to those markets, he explains.
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