With the first quarter’s results in, the No. 1 volume market for U.S. pork exports – Mexico – remains on track to set new records in 2012, according to the U.S. Meat Export Federation (USMEF).
A combination of factors ranging from high corn costs for Mexican hog farmers to the elimination of duties on U.S. pork, a Mexican pork industry increasingly focused on exports and severe drought in Mexico have created conditions that have boosted U.S. pork exports there by 17% in volume and value through the first three months of 2012.
“The outlook for 2012 continues to look very positive,” explains Chad Russell, USMEF regional director for Mexico, Central America and the Dominican Republic. “Now that U.S. pork exports aren’t being affected by tariffs (from a now-resolved North American Free Trade Agreement [NAFTA]-related trucking dispute), we’re in a much better competitive position and are regaining the market share we lost previously.”
While Mexico has been about 66% self-sufficient in pork production, Russell sees that situation changing to encourage more imports as high corn prices drive some smaller producers out of business while larger producers focus on the higher value export market. “A bushel of corn, delivered, costs about $1 more in Mexico than it does in the United States,” Russell says. “That’s huge when you consider that feed accounts for well over half of the cost of bringing a hog to market.”
In terms of exporting its own pork, Mexico has seen sales to its No. 1 international customer, Japan, jump more than 37% so far this year, according to the Global Trade Atlas. Smaller amounts of pork exports to South Korea and the United States are up 77% and 91%, respectively.
“The Mexican pork industry is well aware of the premiums to be earned in the export market,” acknowledges Dan Halstrom, USMEF senior vice president of marketing and communications. “While Mexico remains a top customer for U.S. pork, particularly hams, it is aggressively pursuing exports and is becoming a formidable competitor in places like Japan.”
Through the first quarter of this year, Mexico’s pork exports to Japan have topped $78 million, making it the No. 4 exporter to Japan behind the United States, Canada and Denmark.
Mexico also has its eye on the world’s largest pork market: China. Russell notes that several Mexican pork processors are finalizing approval to export to China and he expects product to start flowing later this year.
While Mexico looks outward to selling its pork, the United States sees opportunities for continued growth in its pork sales to its NAFTA partner to the south.
An important factor in this continued growth is the increasing confidence of Mexican consumers in pork. Beleaguered for years by a reputation as a lesser-quality protein, pork is showing signs of a rebound in the country.
USEMF is working on that issue on several levels, including its Pork Demand Development campaign implemented last summer. The program is designed to boost overall pork consumption among Mexicans by educating them about the taste, versatility and nutritional value of pork. Per capita annual consumption of pork in Mexico averages 30.8 lb., less than half the amount consumed in the United States.
Other initiatives designed to enhance U.S. pork trade with Mexico include:
· A new educational program focused on Mexico’s culinary schools is introducing future chefs to U.S. red meats, providing information on safety and quality of USDA-inspected red meat. Details cover how to utilize specific cuts in a variety of dishes.
· Meetings with importers, distributors and processors who don’t currently purchase U.S. pork are being held to familiarize them with the product and its availability. Contact information is provided to interested buyers.
· Specially designed training for processors of U.S. pork will help increase yield, improve efficiencies and offer U.S. pork solutions to their operational challenges.
· Seminars conducted at key border crossing locations (Reynosa, Tijuana, Nuevo Laredo, Ciudad Juarez) in conjunction with the Mexican government agency SAGARPA will help familiarize customs authorities with U.S. food safety systems as well as the attributes of U.S. red meat products.
“While some initiatives like the culinary education program and the meetings with importers are specifically designed to increase sales, efforts like the seminars with SAGARPA are important because they build relationships that can benefit us when there are issues with product crossing the border,” Russell explains.
Through the first three months of 2012, U.S. pork exports to Mexico stand at 162,721 metric tons (358.7 million pounds) valued at $299.7 million. Those totals are on pace to set new annual highs. In 2011, U.S. pork exports to Mexico set a new record at $1.04 billion in value, while the volume record of 545,732 metric tons (1.2 billion pounds) was set in 2010. Exports to Mexico in 2012, account for 27.2% of total U.S. pork exports, by volume and 18% by value.