Trade barriers, soft demand keep April beef exports sluggish -

While the overall trend for exports remains sluggish, driven by market access issues and oversupply of domestic product in key markets, several leading trading partners showed positive signs in April.

Beef exports to Japan were up sharply as the island nation regained its ranking as the No. 1 market for U.S. beef for the first time since 2003. At the same time, Hong Kong maintained its rapid growth pace and Taiwan continued its rebound from beta agonist-related issues that slowed exports last year.

While the boost in exports to Japan is encouraging – up 49 percent in volume and 44 percent in value versus the first four months of 2012 – USMEF President and CEO Philip Seng cautioned that Japan has a safeguard in place that will increase tariffs if beef import volumes rise too quickly. This safeguard, which was utilized by Japan in 2003 under similar circumstances, remains an important consideration for U.S. exporters and Japanese importers.

On the pork side, Mexico showed double-digit growth in April after a slow start to the year while Central/South America, the ASEAN region and the Caribbean all grew 30 percent or more for the month. U.S. lamb sales were also up sharply to leading export markets.

Summary of April results
April beef export volume of 86,433 metric tons (mt) was down 9 percent from a year ago and export value was down 7 percent to $434.8 million. For January through April, beef exports were 2 percent higher in value ($1.75 billion) despite a 5 percent decline in volume (343,020 mt).

April pork exports totaled 174,073 mt valued at $475.1 million – down 5 percent and 7 percent, respectively, from a year ago. Through the first four months of the year, pork exports were 10 percent below last year’s pace in both volume (702,268 mt) and value ($1.96 billion).

Russia’s suspension of imports of U.S. beef and pork, which officially closed the market Feb. 11, continues to hamper overall performance. USMEF estimates this trade impasse, which is related to Russia’s enforcement of a zero-tolerance policy for beta agonist use, has cost the U.S. industry about $97 million in beef export value and $58 million in pork export value so far in 2013.

“Along with our lack of access to sell beef in mainland China, this is the biggest barrier we face in terms of market access,” said Seng. “One often overlooked factor is the effect this suspension has on the price U.S. products command in markets other than Russia.

"For example, beef livers to Egypt have increased in volume, but the value is down. There is also downward pressure on the prices offered for rounds, hams and pork for further processing. The impact is much broader than many analysts realize at first glance."

Through April, beef exports equated to 9 percent of U.S. muscle cut production and 12 percent including variety meat – down from last year’s ratios of 9.6 percent and 12.7 percent. Export value equated to $217.54 per head of fed slaughter, up 3 percent from the same period last year.

Pork exports accounted for 21 percent of muscle cut production and 25.3 percent including variety meat. This is down from 24.6 percent and 28 percent, respectively, during the first four months of 2012. Export value for the first four months of 2013 equated to $52.72 per head slaughtered, down from last year’s pace of $58.84.

Japan regains top rank among beef export destinations
The U.S. beef industry continues to capitalize on its recently expanded access to Japan. With April exports more than doubling last year’s performance, exports to Japan moved 49 percent higher in volume (59,969 mt) and 44 percent higher in value ($382.3 million) for the year. This made Japan the leading destination for U.S. beef in both volume and value, overtaking Canada.

“Many observers felt USMEF’s growth projections for Japan were overly bullish,” Seng said. “But we were keenly aware of the unmet demand from existing buyers and the opportunities to secure new business once we had a wider supply available. This shows once again the importance of having experienced staff on the ground who know how to direct marketing resources in a way that will maximize results.”

U.S. beef exports to Canada slowed in April, though volume (55,485 mt, up 10 percent) and value ($355,321, up 15 percent) remained higher for the year. Exports to Hong Kong, which also recently expanded access for U.S. beef to include bone-in cuts and some products from cattle over 30 months of age, soared by 87 percent in volume (27,965 mt) and 79 percent in value ($158.6 million) in the first four months of the year.

Taiwan also continues to perform extremely well in 2013, with exports beating last year’s pace by 84 percent in volume (10,841 mt) and 129 percent in value ($84.6 million). While exports to Taiwan slowed in 2011 and 2012 due to an impasse over beta agonists, this year’s January-April exports exceed the pace achieved when this market was performing at its peak.

In addition to the Russia closure, beef exports were hampered by slow demand in Mexico and South Korea. In the case of Mexico, the price point relative to other competing proteins continues to be an issue that has proven difficult to overcome as exports declined 22 percent in volume (56,766 mt) and 25 percent in value ($242.7 million) compared to a year ago.
In Korea, the main issue is an oversupply of domestic protein, which has created a difficult climate for imported products. Exports to Korea were down 20 percent in volume (37,886 mt) and 9 percent in value ($199.7 million). Exports also slumped to the ASEAN region due to weak demand in Vietnam and ongoing trade barriers in Indonesia. This was partially offset by a strong performance in the Philippines, where exports were up 16 percent in volume (4,730 mt) and 35 percent in value ($21.3 million).