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Pork and Beef Trade Trends

26 June 2013

ANALYSIS - While increasing per-capita pork consumption has driven Chinese pig meat production over the last four decades, the US has looked for export markets, according to one industry analyst. Brazil welcomes the news that Ukraine has lifted its ban on pork imports from Brazil. Beef herd liquidations in Mexico are impacting US-Mexican trade.

With Shuanghui International - a Chinese meat company – expressing interest in purchasing Smithfield Foods - a global food company based in the US that is heavily involved in pork production - one industry analyst has compared pork consumption and production in China and the United States between 1975 and 2013.

Overall, Chinese consumption currently is over six times that of the US, observed Gary Schnitkey of the Department of Agricultural and Consumer Economics at the University of Illinois.

In 1975, Chinese consumption was already higher than in the US and it grew at an annual rate of 5.7 per cent, compared to 1.3 per cent in the US. This is not the result of differences in population growth – which are similar – but rather in divergent pork production patterns. Between 1975 and 2013, annual per-capita consumption of pork in China increased by 4.6 per cent while US consumption remained roughly stable. Growth in per-capita pork consumption largely is attributable to increases in Chinese income levels, according to Dr Schnitkey.

Chinese pork production has increased at roughly the same rate as Chinese consumption. In recent years, however, there has been some modest growth in Chinese pork imports. There may be questions of whether the Chinese pork industry can maintain domestic pork production growth.

US production has increased faster than US consumption, resulting in the US becoming a net exporter of pork production.

Chinese growth offers opportunities for both the pork and grain sectors in the US, Dr Schnitkey concludes.

Shuanghui International is reported to have received US$7.9 billion in loans from Bank of China and Morgan Stanley for its acquisition of Smithfield Foods.

Also in pork trade news, Ukraine has lifted an import ban on Brazilian pork. The ban, which has been going on for two months, led to an 18 per cent export drop for Brazil in May. The news has raised private sector hopes as Ukraine had been one of the largest buyers of Brazilian pork.

Turning to the international beef trade, Mexico has long been a major beef industry trading partner with the US in roles that have continually evolved into deeper and more integrated relationships.

According to Derrell S. Peel of Oklahoma State University, for many years, Mexico has been the major source of imported feeder cattle. US beef exports to Mexico developed in the late 1990s and Mexico has been one of the top beef export destinations since then.

Most recently, however, Mexico has emerged as a top source of beef imports into the US.

All of these markets have been rather dynamic in recent years and raise the question of what the nature of US and Mexican cattle and beef trade will be in the future.

Looking ahead, the rate of Mexican cattle exports to the US have dropped so far in 2013 after a sharp decline in late 2012 and seem to be on track to decrease by more than 40 per cent this year – possibly even more.

Mexican herd liquidation in recent years is likely to mean diminished beef production in Mexico and diminished levels of cattle exports to the US for several years, according to Dr Peel.

Jackie Linden

Jackie Linden

Top image via Shutterstock

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