Becca Nepple, National Pork Board; Dr. Dermot Hayes, Iowa State University, from the 2015 World Pork Expo, June 3 - 5, 2015, Des Moines, IA, USA.

1. Pork Academy
U.S. Pork Exports Situation and Outlook
Becca Nepple, VP International Marketing, National Pork Board
Dermot Hayes, Professor, Iowa State University

2. Checkoff Focus on International Trade

3. Areas of Checkoff Investment
• Marketing and promotion
• Market research
• Market intelligence
• New product development
• Marketing and promotion
• Market research
• Market intelligence
• New product development

4. Growth of US Market Due to Access

5. Partnership with USMEF

6. Where Are We Now?

7. Looking Back: 2014
• Value record: $6.674 B, ↑10%
• Volume: 4.803 B lbs, ↑2%
• Value at $62.45/head

8. Current: 1st
Quarter 2015
• Value: ↓14%
• Volume: ↓10%
– But, March showed largest volume of exports in 11 months
– March showed a 10% increase from February
• Value at $48.48/head
• 25% of production

9. Addressing Compounding Issues
What’s Happened?
•China access
•Russia closure…EU/Canada nimble
•Currency issues…many competitors
have advantages
•West coast port issues…still backlog,
loss of chilled value
What’s Coming?
•MCOOL retaliation?
•Expect big increase in U.S.
production

10. Top US Export Markets: Jan-Mar 2015
Mexico 396.0, ↑7%
Japan 229.1, ↓13%
China/HK 149.4, ↓40%
Korea 126.5, ↑43%
Canada 107.8, ↑2%
C/S Am 65.9, ↓8%
Oceania 28.1, ↓41%
Carrib 22.4, 0%
ASEAN 20.9, ↓57%
Japan $386.6, ↓19%
Mexico $321.2, ↓6%
Canada $192.4, 0%
Korea $180.4, ↑55%
China/HK $152.1, ↓42%
C/S Am $80.1, ↓5%
Oceania $45.2, ↓37%
Carrib $25.4, 0%
ASEAN $21.0, ↓61%
Volume (Million Pounds) Value (Million $)
Source: USDA statistics compiled by USMEF, compared to 2014

11. Source: USDA/FAS, PSD Data
Lost Share of Global Pork Exports

12. Where Do We Go From Here?

13. We Have a Goal!
By 2020, increase pork exports through access
to new markets and expansion of existing
markets, and achieve an increase an average
annual increase of 9% in value and quantity
(compared to 2014 year-end data)
By 2020, increase pork exports through access
to new markets and expansion of existing
markets, and achieve an increase an average
annual increase of 9% in value and quantity
(compared to 2014 year-end data)

14. How? Move Muscle Meats

15. How? Move By-Products

16. How?
• Promotion
• Focus in industry
• Access
• Product

17. Economist’s Perspective

18. Overview
• Big picture: where is the available land and what
is the best way to move agricultural products?
• Obstacles to agricultural trade
• Importance of trade agreements
• Impact of trade on pork market in 2014 and 2015

19. World Map in Proportion to Population

20. World Map in Proportion to Arable Land

21. World Map in Proportion to Cereal Sales

22. Growth in Wealth (1975-2002)

23. Ship Grains or Meat?

24. So Why Do We See Grain Trains?
• Governments in Asia have traditionally protected
their livestock and allowed for the free movement
of grain
• They do this to encourage economic activity and
to maintain a semblance of food security
• This means that free trade agreements result in
additional meat exports

25. Where Does the Pork Come From?

26. US Currently Has FTAs with 20 Countries

27. Plus, Potential with 12 TPP Countries

28. Plus, Potential with EU

29. Colombia: An Example
• Continued phase
out of duties
• Solution to the
Trichinae barrier has
provided better
access for chilled
product
• Sales hit $132
million in the past
12 months
• Is Peru next?

30. Colombia: An Example

31. Mexico: An Example

32. Global Carcass Price

33. Exports, Year Ending March
Partner Country
United States Dollars
% Change
2015/20142013 2014 2015
World 6,356,995,286 6,444,731,449 6,731,950,793 4.46
Japan 1,944,093,980 1,890,979,158 1,849,003,999 - 2.22
Mexico 1,159,058,123 1,416,170,806 1,675,061,418 18.28
Canada 866,787,832 835,798,099 911,654,074 9.08
Korea, South 374,053,384 303,748,135 518,770,970 70.79
China 736,872,753 769,366,505 378,068,857 - 50.86
Hong Kong 188,501,768 228,669,018 358,607,555 56.82
Australia 207,187,710 190,118,271 165,547,314 - 12.92
Russia 243,184,757 118,195 137,911,189 ∞
Colombia 58,574,462 112,876,080 132,428,229 17.32
Philippines 104,946,515 117,085,601 96,459,289 - 17.62
Singapore 26,408,708 65,239,398 59,592,371 - 8.66
Dominican Republic 37,271,308 45,903,784 49,469,672 7.77
Chile 45,810,074 64,398,717 48,028,675 - 25.42
Honduras 47,131,329 49,748,353 46,258,745 - 7.01
Guatemala 27,318,824 30,114,923 43,942,261 45.92
Taiwan 39,813,863 38,647,545 39,217,511 1.47
Panama 22,232,779 27,105,125 28,682,419 5.82
New Zealand 28,086,688 24,599,989 18,322,778 - 25.52
Peru 5,798,896 15,502,271 16,164,809 4.27

34. Quantity of Exports
Partner Country Unit
Quantity
% Change
2015/20142013 2014 2015
World T 2,267,626 2,284,200 2,206,919 - 3.38
Mexico T 613,996 703,089 745,420 6.02
Japan T 443,136 439,861 455,275 3.50
Canada T 238,577 217,691 209,210 - 3.90
China T 354,249 353,644 164,992 - 53.35
Korea, South T 135,231 107,180 155,644 45.22
Hong Kong T 78,719 86,556 138,429 59.93
Colombia T 21,757 44,037 46,578 5.77
Australia T 65,539 56,436 43,081 - 23.66
Philippines T 46,841 52,433 37,431 - 28.61
Russia T 85,095 33 36,257 ∞
Singapore T 8,885 26,062 21,167 - 18.78
Dominican Republic T 15,982 19,510 18,194 - 6.75
Chile T 17,768 25,506 17,994 - 29.45
Honduras T 20,023 21,417 17,534 - 18.13
Taiwan T 17,339 16,856 16,514 - 2.03
Guatemala T 11,981 11,397 13,970 22.57
Panama T 10,445 11,571 10,295 - 11.03
Peru T 2,665 6,912 6,612 - 4.34
Bahamas T 4,436 4,832 4,894 1.27
New Zealand T 9,599 8,097 4,842 - 40.20

35. Impact of Exports on Live Hog Prices
• Last spring we had access to China and Russia, and
Japan, South Korea and Mexico had PED
• As a result, export growth was strong and prices
were high
• Since then the EU and Canada lost a half million
ton market in Russia, we lost access to Russia and
have had problems in China
• China is particularly important because it buys so
many variety meats

36. China Opportunity
• A 10,000 ton change in direct monthly exports of
pork and pork variety meats to China causes a
$5.50/cwt change in live hog values for that
month. This 10,000 tons represents the exports
sales lost due to this restriction
• Exports to China have fallen by 15,000 per month
• Paradoxically, China needs more imported pork
because it has killed millions of sows

37. February 2015 futures

38. June 2015 Futures

39. EU Exports to Asia

40. EU and US Exports to China

45. So, What Happens Next?
• 2014 pork production was only 2.5% lower than 2013
production, yet we had record prices; part of this was
due to strong export demand
• USDA expects 8.9% more US pork production in the third
quarter and 6.1% more pork in the fourth quarter, this is
due to more sows, recovery from PED and lower cost of
gain
• It would take a 10% growth in US pork consumption to
clear this market unless exports grow…..very difficult
unless we get an outbreak of bird flu in the south this fall

46. Three Possible Outcomes
• We solve the Ractopamine dilemma and get back
into China, prices stay near those on the CME
• We enter into a price war with the EU and expand
the volume, but not the value of exports
• US hog prices fall so much that weights fall and
the surplus is eliminated

47. Questions and Comments