U.S. pork exports had a record-shattering year in 2008. Asia led the charge with record-large totals in several individual markets. Japan set the all-time, single-market value record of $1.54 billion that year – more than the U.S. pork industry exported worldwide less than a decade ago. The China/Hong Kong region more than doubled any previous year’s purchases of U.S. pork (to almost $400 million), while South Korea, Taiwan and the ASEAN region also set new records.
Asian import demand moderated in 2009, as supplies increased – especially in China. Still, the volume of U.S. pork sold remained high by historical standards. Despite a significant increase in Japan’s domestic production and a slowing of its economy, Japan exceeded $1.5 billion in U.S. imports for the second year in a row. This is remarkable, considering that Mexico is the only other market in which the U.S. pork trade has ever broken the $500 million mark in a single year (2009).
Also in 2009, Taiwan topped its single-year value record by more than one-third – to $42.7 million – and the ASEAN region set a new volume record, breaking the $100 million mark in value for the second straight year. New U.S. pork export records were also registered in Australia and the Philippines.
Future Export Growth
While 2008 may appear to be an anomaly, the U.S. pork industry should not think of that year as an unrepeatable export performance. In fact, as local production costs escalate, Asian import demand is expected to reach new heights in coming years. And given the relatively low share of total pork consumption that is currently accounted for by imported pork, it is easy to envision significant future growth potential for U.S. pork sales in Asia.
In Japan, for example, the U.S. captured an all-time high 46% share of the imported pork market last year and more than 70% of the high-value, chilled pork market. Yet this still constituted only 17% of all the pork consumed in Japan. Think about that for a moment: 17% equals $1.5 billion, so for every percentage point of Japan’s consumption fulfilled by U.S. pork, the value was more than $88 million.
For many years, Japan has encountered serious production challenges as it tries to keep up with pork demand. This year, a significant foot-and-mouth disease (FMD) outbreak has already led to the disposal of tens of thousands of swine. But when Japan hangs out the “help wanted” sign to meet the need for imported pork, there are plenty of interested candidates.
More than 20 pork-exporting countries are actively and aggressively promoting their products in Japan. Canada, Denmark, Chile, Mexico and China are some of the competitors that strategically focus on the Japanese consumer as a premium export target.
“Japan is an exceptionally important market and it will continue to be as time goes on,” says Roel Andriessen, senior vice president of international sales for Tyson Foods and a member of the U.S. Meat Export Federation executive committee. “This is especially true from a chilled perspective for loins, butts and bellies, and also on the frozen side for manufacturing.”
Andriessen sees even greater long-term growth opportunities in other Asian markets. “Markets like Korea, Taiwan and Hong Kong hold many excellent growth opportunities for U.S. pork,” he says. “ASEAN markets like Singapore and the Philippines also have a lot of untapped potential. But we really need to be more aggressive about educating the consumer – and the trade for that matter – about the quality and safety of U.S. pork and to overcome any misperceptions about our product. It’s important that our industry dedicates resources to do that effort.”
Pork Export Gains in 2010
The ASEAN region displayed remarkable growth through the first four months of 2010, gaining more than 50% in volume and 65% in value over the same period last year. Exports to Taiwan are up only slightly in volume, but have surged more than 20% in value. Exports to Hong Kong are up 48% in volume and 28% in value. Exports to Korea have been lower in 2010, but showed very positive momentum in April, registering the largest export volume since October 2009 and the highest export value in the past 12 months.
But achieving and maintaining these results represent tremendous challenges as these markets become increasingly competitive. In the ASEAN market alone, where price considerations are paramount, a diverse cast of exporting countries targets the region. Canada is the United States’ closest competitor in the Philippines, while Brazil holds the top spot in Singapore. Australia exports air-flow chilled pork to Singapore, while simultaneously importing large volumes of pork for its processing needs.
Hong Kong is notoriously known as a hyper-competitive market for all animal proteins, including pork. The United States is the market share leader in Hong Kong, but China, Brazil and Germany are in hot pursuit.
In Taiwan, the United States has a comfortable lead over its primary foreign competitors, but still faces major challenges with regard to product differentiation and identification in a market that was once a pork export powerhouse. Domestic pork enjoys a high-quality reputation in Taiwan because of its familiarity to consumers as a strategic agricultural industry and "home grown," fresh pork is generally well-regarded. Typical of many Asian markets that have large pork sectors, aggressive branding and imaging support from the Taiwanese government is prominent. Further penetration of this market by U.S. pork will bring an outstanding return, as per-capita consumption of pork in Taiwan is more than 85 lb., annually, and imports currently account for a low percentage of consumption. To gain market share, however, requires sufficient resources to compete with the domestic product.
Throughout Asia, U.S. pork faces a similar landscape with consumer growth in population and purchasing power. The retail and foodservice sectors are expanding rapidly, mainly in the direction of more western concepts, creating the need for more innovate and high-quality pork cut merchandising. These developments are not lost on the world's pork-producing nations, which are pursuing these opportunities very aggressively. While U.S. pork has made magnificent strides in Asia in recent years, capitalizing on future opportunities will require constant effort. The best is certainly yet to come, as marketing resources for U.S. pork are strategically deployed in key Asian markets.
Submitted by U.S. Meat Export Federation;
e-mail: info@usmef.org