This past year the U.S. has had record exports for both beef and pork. The numbers are through the roof. For beef the U.S. is at or above 2003 levels, before the first case of BSE. The problem we are having is the lack of product for each market. If the product is available we seemed to be competitive in just about every market.  On the pork side we have been seeing the biggest increase in exports that the U.S. has ever seen. We are seeing increases that are in the 50% to 60% range.

How are we doing this?  One, the value of the dollar the past year or so has made our products extremely competitive in the international market.  Two, we have the products to sell. Our pork numbers are at record levels.  Today one out of five hogs processed goes out of the country.  Think what the price of pork would have been if we wouldn’t have been exporting so much product.  I have heard several people in the pork industry say we would have had prices below $10 cwt. without exports. 

With the falling price of grain, the livestock producers might be thinking about expanding their herds because of these export numbers and the potential to make profit.  However, they might want to think twice about expanding.   

Being an officer of the United States Meat Export Federation, I have access to information that I thought I would share with you for those producers thinking about expansion.  We have some major problems developing in the export market due to the recent financial crisis and other issues that I will list below. One thing that I do not understand is with the financial crisis we have here in the United States and now other countries, the value of the U.S. dollar is making huge increases in value compared to other currency. If you think you have been isolated so far from the financial crisis, just read on.   

Mexico is our #1 export market for agriculture products of the United States.  This is especially true for red meat.  The value of the Mexican Peso has devaluated over 20% compared to the U.S. dollar over the last month or so.  This means for companies importing our meat products, their costs in Mexico have increased 20% in the last month.  The exports going to Mexico are already showing signs of slowing down because the price of our products are so high compared to just two months ago.  Politics between the U.S. and Mexico governments are also a factor.  We will have to keep a very close eye on this market and work hard to keep it open and be able to maintain the exports we have.   

China has shown increases of 300-400% in imports of pork from the United States at different times throughout the year.  There are several reasons for this, including its hosting of the Olympics, recent earthquakes, the high cost of corn for feed, a major outbreak of disease in their swine herd, and finally, as the Chinese economy develops, its people are demanding a better diet.  These are all positive signs, so what is the problem?

Not surprisingly, government politics across the world is one major problem.  NAFTA talks, human rights, stubbornness of governments to negotiate for whatever reason, and of course, the economy.  The world economy has slowed China's growth considerably.  But the desire of the Chinese government is to make their country more self-sufficient in food production and it is willing to subsidize to get there, accelerating the slowdown of our exports to China.   

Both Korea and Japan offer unique issues as well.  While the new agreement with Korea has increased beef exports significantly, our problem is lack of retailers getting the product moving in their country.  We are getting a glut of these products in their ports and when that happens, the concern is who is responsible for the loss from the currency exchange rate?

The problem we are having with Japan is the age restriction of the beef that we are able to ship to their country.  We simply have not been able to produce enough beef to meet the demand of that market.  The value of the yen compared to the dollar and the economy is also taking its toll.   

Russia is really having a devastating effect on the protein market in the United States.  Russia needs all types of protein for its people.  The problem is the ability of the Russian government to pay for those products has diminished quite significantly in the past months.  Russia has been exporting oil to generate revenue in order to pay for products its country needs.  With the price of oil dropping so significantly in the last couple of months, their income source is drying up. 

The Russians also have a desire to try to produce more food themselves.  Therefore, our exports going to them are slowing down.  The sector with probably the largest decrease is the poultry sector.   Major poultry producers in the United States have stopped ordering large number of chicks to be grown here then exported.  This is trickling down to all supply sectors in agriculture.   

We have an abundant supply of a quality and safe food to export to developing countries, but we are in very challenging times.  My goal as an officer of USMEF and a representative of Farm Bureau, is to do everything in my power to keep these markets open and hopefully increase the amount of product that we are shipping, so that we can keep American agriculture profitable.    

Keith Miller

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