An outlook for 2013 – Part 1: Top 5 opportunities

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Farm Forum

After a year of challenges – highlighted by the worst drought in more than a half-century – the U.S. red meat (beef, pork and lamb) industry is focusing on 2013 as a year of great opportunities to increase the value those agricultural exports bring to exporters, processors, producers and the broad American agricultural industry that supports them.

The impact of the 2012 drought – which continues into 2013 – cannot be minimized. An estimated 80 percent of U.S. agricultural land was affected, according to USDA reports. Corn production dipped nearly 13 percent below the 2011-12 crop year and was the smallest since 2003-04 with the lowest yields since 1995-96. Soybean production was down 2.5 percent with yields down 6 percent.

A shortage of livestock feed and the high cost of what was available contributed to herd culling and reduced product availability.

With that dismal scenario as a backdrop, the international markets carried their weight in 2012 in terms of returning value to the red meat production chain. With statistics in for the first 11 months of the year, pork exports continue to exceed 2011’s record highs for both volume and value. And although beef exports are down 11 percent in volume, the value of those products is at an all-time high.

As we continue to explore new market niches and expand the spectrum of U.S. red meat products sold internationally, it is gratifying to see the per-head export values for American beef and pork at record highs: $56.12 per head for pork and $214.64 for beef.

So with 2012’s drought and sluggish global economic results as a backdrop, what is the outlook for 2013?

Entering into any new year, the U.S. Meat Export Federation (USMEF) must evaluate not only market conditions in the United States, but economic, industry and political factors in each of our major international markets. In subsequent installments, I will discuss some of the challenges and question marks that could affect 2013’s export outlook. With the information we have at hand, here is our current viewpoint:

2013 U.S. Pork Export Forecast

With one month missing from last year’s totals, we project pork exports for 2012 to reach 2.27 million metric tons (5 billion pounds) valued at $6.35 billion – both new records. For 2013, we forecast volume and value of pork exports to increase 5 percent, reaching 2.39 million metric tons (5.27 billion pounds) valued at $6.6 billion.

2013 U.S. Beef Export Forecast

With November’s data in hand, USMEF projects beef exports for 2012 to reach 1.13 million metric tons (2.49 billion pounds) valued at $5.5 billion, setting a new value

conditions keep prices high and product scarce, including Mexico’s domestic beef supply.

· No. 4 – South Korea: The Korean market was sluggish for all red meat imports in 2012, as the combination of an economic downturn and a brisk rebound in Korean domestic livestock herds after the 2011 foot-and-mouth (FMD) disease outbreak created challenging conditions.

Korea’s domestic beef and pork production are expected to stabilize in 2013, and year two of the Korea-U.S. free trade agreement will bring additional tariff reductions that will enhance opportunities for exports. Even with the challenging conditions of 2012, Korea remained the No. 4 market for U.S. beef exports when measured by value (No. 5 in volume) and the No. 5 pork market. The U.S. also gained market share, accounting for 33 percent of Korea’s pork imports.

· No. 5 – Taiwan: This island nation has been a valued trading partner for both the U.S. beef and pork industries, but controversy surrounding the use of the growth promotant ractopamine interrupted exports for much of 2012. With Taiwan’s adoption of the Codex Alimentarius maximum residue limit (MRL) for ractopamine in imported as well as domestic beef, exports of U.S. beef are returning to the point where they were in 2011 when Taiwan was the No. 6 market for U.S. beef.

The controversy has not been resolved for pork, however. While Taiwan’s adoption of the MRL for beef was a very positive step, similar action for pork is still needed. Since Taiwan’s pork sector is, by far, the biggest and most influential sector of agriculture in that country and pork producers have more political clout, resolution of the issue will be more complex.

There are many more opportunities for growth of U.S. red meat exports in the coming year. Pork to Australia. Both beef and pork to Central and South America. Beef to the Middle East. The potential for expanding access for U.S. lamb to key markets currently closed, including Japan.