Annual trade statistics reported here are finalized each spring. In addition, Livestock & Meat International Trade Data contains monthly and annual data for imports and exports of live cattle, hogs, sheep, and goats, as well as beef and veal, pork, lamb and mutton, chicken meat, turkey meat, and eggs. The tables report physical quantities, not dollar values or unit prices. Data on beef and veal, pork, and lamb and mutton are on a carcass-weight equivalent (CWE) basis. Breakdowns by country are included.
Since the beginning of the century, the United States has been one of the top five annual pork exporters in the world, shipping over 4 billion pounds CWE of fresh and frozen pork cuts to foreign markets. The United States is a relatively recent entrant to the international pork market, becoming a net exporter in 1995. Since 2000, net exports have increased nearly eleven-fold.
Becoming a net exporter is one result of significant structural changes affecting the U.S. pork industry in recent years. Since the mid-1980s, the industry has moved away from a structure based on many small, independently owned hog operations. The industry has gradually moved toward fewer, larger operations that rely on contracting and vertical coordination to reduce producer risk and optimize a year-round processing capacity that can accommodate cyclically large fall and winter slaughters.
The restructured U.S. pork industry produces more pork with fewer sows. Such production gains derive from lower costs of realized scale economies, producer adoption of improved swine genetics, and new, innovative swine management techniques. Since the early 1990s, these productivity gains have allowed the industry to export a higher percentage of commercial pork--reaching 14 percent in 2007, compared with 2 percent in 1990.
Primary markets for U.S. pork products are Japan (which accounts for about one-third of U.S. exports), Mexico, and Canada. The primary competitors of the United States in foreign markets are Canada, Denmark, and Brazil.
Since the turn of the century, Japan has imported about equal shares of fresh chilled pork and frozen pork products. Japan's fresh pork has been supplied primarily by the United States. For frozen pork, Denmark has been Japan's primary supplier, followed by the United States and Canada. Imported fresh pork products (higher priced cuts such as loins) are typically marketed through retail channels in Japan, while frozen pork cuts (mainly boneless bellies and shoulders) are used as inputs for processed pork products.
Mexico has been the second-largest export market for the United States. Mexican demand for U.S. pork products appears to be sensitive to changes in income. The following chart shows the decline in U.S. exports that accompanied the Mexican Peso crisis in 1995, followed by the slow recovery of the Mexican economy and increased demand for U.S. pork products. However, negative growth of the Mexican economy during the early 2000s brought about a slowdown in U.S. pork exports, rather than a decline. From 2003 forward, positive economic growth and Mexican demand for imported pork accelerated simultaneously.
Canada has been the third-largest foreign market for U.S. pork products. Higher Canadian demand for U.S. pork cuts in recent years has been accompanied by significant expansion in the Canadian pork industry. Greater flows of U.S. pork to Canada, despite higher Canadian production, are largely attributable to two factors. First, Canadian traders export Canadian pork cuts into lucrative foreign markets, thereby "shorting" the domestic market. Competitively priced U.S. pork cuts thus flow north to meet Canadian consumer demand. Second, economic forces are pushing U.S. and Canadian food industries closer together. A North American pork industry will continue to develop as prices and policies cause decisionmakers to increasingly ignore national borders.
The United States has accounted for a diminishing share of world pork imports as U.S. imports fall and world trade expands. The United States now accounts for less than 10 percent of total global imports. The lion's share of U.S. pork imports originates from Canada and Denmark. In recent years, more than four-fifths of U.S. imports came from Canada, while Denmark accounted for about one-tenth. However, Canada's preeminence as a supplier to the United States is a recent development. As recently as 1985, Denmark and Canada each supplied about two-fifths of U.S. pork imports.
What has changed? First, the significant expansion of the Canadian pork industry in the last decade has enabled it to supply pork cuts to fill deficit U.S. markets. Also, a number of factors have combined to lower overall costs of trading with Canada, relative to Denmark. The North American Free Trade Agreement (NAFTA), relatively low transportation costs, and cross-border investments have together accelerated the rate of integration in the North American pork and foodservice industries. Nevertheless, Denmark is likely to be a presence in the U.S. market for some time, simply because it is a relatively low-cost supplier of ribs, a cut for which American consumer appetites seem insatiable.
The United States is a large net importer of hogs, with trade moving from north to south. Significant numbers of live hogs are imported from Canada--most of which are likely to be feeder animals, while U.S. hogs are exported sporadically to Mexico.
Exports. Since the mid-1980s, Mexico has been the destination of over three-fourths of U.S. hog exports, while less than one-fourth went to Asia. Slightly more than three-quarters of U.S. hog exports were slaughter animals (animals weighing more than 50 kilograms) and about one-tenth were classified as breeding animals.
Since 2003, nearly all hogs sent to Mexico have been slaughter hogs. Mexican demand for U.S. hogs tends to be strongest in the fourth quarter of the year, when U.S. slaughter hog numbers typically achieve annual highs and live hog prices fall to annual lows.
Imports. Canada is by far the most important exporter of live hogs to the United States. Since 1989, Canadian hogs have composed the majority of hogs imported into the United States. The following chart shows two important features of Canadian hog exports. First, the number of hogs imported annually from Canada has increased more than fivefold since 1989. Second, the feeder pig component of those imports has almost quadrupled. Canadian feeder pigs have clearly evolved into a key component of the U.S. pork industry.
In recent years, many factors have converged to create strong incentives for Canadian producers to export feeder pigs to the United States. Among the most important elements was the drive by the Canadian Government to curb expenditures in the 1990s, including abolishing the Crow Rate grain-transport subsidy in 1995. Eliminating this subsidy had two important effects. First, without the transport subsidies, producers in the Western provinces had an incentive to use grain for livestock production. Second, lower agricultural subsidies in Canada resulted in reduced U.S. countervailing duties on imported Canadian hogs. These policy changes created powerful incentives for the Canadian pork industry to expand.
On the U.S. side, factors such as available slaughter capacity, dependable feed supplies, and environmental regulation favoring the construction of hog-finishing facilities in Corn Belt States coalesced to generate significant U.S. demand for Canadian feeder pigs. The trend is likely to continue.