Export Update/

Sow Housing

Dallas Hockman

Vice President

NPPC

US Share of World Exports

Source: USDA FAS

• US is top exporter of pork in the world

• EU is 2nd

2012 Year-end Pork Exports – A New

Record

• 6.3 Billion

– ↑3.5%

• 4.987 Billion lbs

– ↑ slightly

Source: USDA statistics compiled by USMEF

Country/Region 2011 2012 % Change 2011 2012 % Change

Japan 493,343.2 455,779.0 -8% 1,962,745 1,986,532 1%

Mexico 537,490.5 600,950.5 12% 1,042,229 1,126,830 8%

Canada 204,647.4 235,603.8 15% 736,498 855,715 16%

China/Hong Kong 483,009.7 431,144.7 -11% 909,468 886,178 -3%

Russia 69,327.7 93,379.9 35% 217,009 268,250 24%

South Korea 188,248.1 150,448.5 -20% 497,009 421,075 -15%

Australia 64,422.8 67,780.5 5% 204,896 209,232 2%

ASEAN 53,599.2 50,068.0 -7% 129,484 121,896 -6%

Central and South America 72,131.1 91,217.9 26% 187,004 228,920 22%

Caribbean 34,072.7 34,952.8 3% 85,324 87,166 2%

European Union 8,227.5 7,534.3 -8% 32,030 24,654 -23%

Taiwan 26,981.4 18,128.1 -33% 53,845 41,164 -24%

Other 18,162.9 25,202.3 39% 50,265 65,147 30%

World Total 2,253,664.2 2,262,125.1 0% 6,107,806 6,322,289 4%

January-December January-December

U.S. Pork and Pork Variety Meat Exports

Volume Value

(Metric Tons) (US $1,000)

January-April 2013 Exports

• $1.96 billion

– ↓10% from Jan-April 2012

• 1.548 billion pounds

(702.3 million metric tons)

– ↓10% from Jan-April 2012

– ↑6.8% from March

Source: USDA statistics compiled by USMEF 2013

Top US Pork Export Markets: Jan-April 13

Mexico

419.9 M lbs, ↓8%

Japan

315.8 M lbs, ↓12%

China/HK

298.3 M lbs, ↓13%

Canada

164.9 M lbs, ↑4%

South Korea

96.2 M lbs, ↓35%

Japan

$637.1 M, ↓9%

Mexico

$345.7 M, ↓8%

China/HK

$287.7 M, ↓8%

Canada

$265 M, ↑3%

South Korea

$119.1 M, ↓38%

Volume

Value

Source: USDA statistics compiled by USMEF, compared to Jan-April

2012

Country/Region 2012 2013 % Change 2012 2013 % Change

Japan 161,933.3 143,263.9 -12% 699,931 637,064 -9%

Mexico 207,095.3 190,464.8 -8% 377,366 345,722 -8%

Canada 71,679.1 74,816.6 4% 257,627 265,001 3%

China/Hong Kong 154,883.4 135,300.3 -13% 312,754 287,032 -8%

Russia 24,824.4 5,768.5 -77% 75,682 17,907 -76%

South Korea 66,414.7 43,612.2 -34% 192,651 119,140 -38%

Australia 24,889.3 21,647.9 -13% 77,285 69,838 -10%

ASEAN 14,696.6 20,779.8 41% 38,732 50,975 32%

Central and South America 27,076.8 33,462.3 24% 69,929 83,779 20%

Caribbean 11,700.8 12,237.4 5% 29,425 29,943 2%

European Union 2,508.6 2,180.2 -13% 7,969 10,321 30%

Taiwan 6,998.4 7,137.1 2% 15,510 16,040 3%

Other 6,972.5 11,599.8 66% 17,926 30,167 68%

World Total 781,673.2 702,270.8 -10% 2,172,787 1,962,929 -10%

January-April January-April

U.S. Pork and Pork Variety Meat Exports

Volume Value

(Metric Tons) (US $1,000)

Monthly Pork Exports

Source: USDA statistics compiled by USMEF 2013 Metric Tons

Exports Share of Pork Produced in US

Source: USDA *includes sausage casings

25%

Exported Product Value to Producers

• Export value equal to $52.72 per head year-to-date,

down from $58.84 for Jan-April 2012

• Example: • Domestic ham value is $0.60/pound

• Export ham value: $0.75/pound

• $0.15 x about 46 pounds per head = $7 per head premium

• 40%+ of all U.S. hams exported

• For every $1 million dollars of muscle meats

exported, live value increases by $0.05/CWT

• For every $1 million dollars of variety meats

exported, live value increases by $0.20/CWT

Variety

Meat

Product

Domestic

Price/lb.

Exported

Price/lb.

Bungs $0.10 $1.50

Ears $1 $2.25

Front Feet $0.40 $1

Hind Feet $0.20 $0.70

Stomach $0.80 $1.30

Tongues $0.60 $1.35

Exported Product Value to Producers

0

150,000

300,000

450,000

600,000

750,000

900,000

1,050,000

1,200,000

1,350,000

1,500,000

1,650,000

1,800,000

1,950,000

2,100,000

2,250,000

Met

ric

To

ns

Year

U.S. Pork ExportsCanada FTA

NAFTA

(Mexico)

WTO Uruguay Round

(Japan & South Korea)

U.S. -Taiwan

Pork Deal

China

WTO Accession

Russia Pork

TRQs

Australia

FTA

DR-CAFTA

U.S. - Korea

U.S.-Colombia

U.S.- Panama

• Asia-Pacific region free trade agreement (FTA) negotiation

• 11 countries—Australia, Brunei, Canada, Chile, Mexico, New Zealand, Peru, Singapore, USA, Vietnam

• Japan’s (almost official) joining TPP is a game changer

• The most important FTA the U.S. has ever negotiated thus far

• Goal: Removal of all tariff and non-tariff barriers

• Major payout is resolving sanitary and phytosanitary (SPS) barriers

• Goal - to reach an agreement by fall 2013, but that will be difficult as many issues still remain outstanding

Trans-Pacific Partnership (TPP)

Transatlantic Trade & Investment Partnership (TTIP)

• Significant undertaking

• Free trade negotiations between the U.S. & 27-member European Union

• Negotiations will begin July 2013

• NPPC leading lobbying effort and building coalition of other ag groups

• Agreement must be comprehensive, include sensitive issues such as agriculture

Transatlantic Trade & Investment Partnership (TTIP)

• Current major barriers to U.S. pork exports:

– Tariff rate quota (TRQ) smaller than Uruguay Round minimum access

– Ban on Ractopamine

– Trichinae mitigation requirements

– Prohibition on pathogen reduction treatments (PRTs)

– Plant approvals

• EU wants to include other unjustified barriers as requirements for market access for U.S. pork & ag products:

– Animal welfare standards

– Geographical indicators

The Economic

Impact of Animal

Welfare Rules

Export Market Evolution

1. Gaining Access to Market

2. Building Market Share

3. Keeping Market Open

Animal welfare rules in the

European Union (EU) • The EU published a set of directives in

November 1991 (updated in 2008) “laying down

minimum standards for the protection of pigs”

that went into effect on January 1, 2013.

• The directives require that sows be housed in

groups (as opposed to stalls, or individual

maternity pens) from four weeks after breeding

until one week prior to birthing

EU’s Progress on Sow Housing Mandated to be in place 1-1-13

Million % Compl Spain 2.5 70% Germany 2.2 48% Denmark 1.28 85% Poland 1.28 80% France 1.2 33% Netherlands 1.02 63% Italy .756 69% Belgium .543 45% UK .487 100% Romania .376 90% Top 10 11.64 83% of EU Sows

EU 27 = 13.95 Mil Sows

EU Sow Stall Ban

• 80 percent of countries still do not comply with new legislation

• EU Commission sent warning letters in February to Belgium, Denmark, France, Germany, Ireland, and Poland

• Countries not in compliance given four months, if remain noncompliant, Commission refers issue to the European Court of Justice

• Estimated 3.25 million sows housed in individual stalls as of Jan. 15, 2013

• Conversion costs centered on $600 per sow

• Ban may reduce EU pork production by 5-10% – 5% = 1.14 million metric tons

• EU Commission projects EU exports expected to decline by 9% from 2011 to 2022

EU Sow Stall Ban

• Production

– EU pork production will decline by 8.9 million MT between 2011 and 2020

– The decline in production will result in a loss of value added of $30 billion from 2011-2020

• Exports

– High pork production costs in the EU will cause a reduction of almost 1 million MT in EU pork exports

Dr. Dermot Hayes Economic Impact Estimate

Canada – Review of Codes

of Practices

• National Farm Animal Care

Council

• Just Released

– 60 Day Comment Period

• Pressure by Retail Council of

Canada

Animal Welfare – Code of Practice

NFACC releases code

CPC economic analysis

60 day public comment

period

Comment period ends

Code Dev. Comm. reviews

comments

Code Dev. Comm. may

make changes

New Code published & circulated

Gestating Sows

• As of July 1, 2024 all sows

must be housed in groups after

breeding (up to 35 days)

• Time in stalls can be extended

to protect the welfare of

individual sows on the advice of

a competent stockperson????

Codes of Practice

• http://www.nfacc.ca/codes-of-

practice/pigs

ISO Animal Welfare Global Outreach

• Continue to oppose the development of an ISO standard on animal welfare, which undermines OIE

• NPPC outreach resulted in a ‘re-start’ of the process – technical specification instead of full standard

• NPPC successful in strong support for comments to draft concept that minimizes mischief, support science • Not endorse 5 Freedoms, overreach and duplication

• NPPC successful in limiting vegan activist groups on the U.S. delegation for next meeting, June 24th

• This process and issue more important with the TTIP moving forward

• Prepare for years of engagement

Restaurants On Site /

Hospitality Retailers Distributor Brands

Arby’s Dunkin’ Donuts Aramark* Costco* Sysco Campbell’s*

Au bon Pain* Einstein Noah* Bon Appétit* Harris Teeter Atlantic Prem.* ConAgra Foods

Baja Fresh Hardee’s/Carl’s* Carnival* Kroger General Mills

Bob Evans* Jack in the Box Compass* Safeway Heinz

Breugger’s* McDonald’s* Dine Equity* Sears/Kmart Hillshire Brands

Burger King* Qdoba Marriott Supervalu Johnsonville*

Cheesecake Fact.* Subway Metz Cul. Mgt.* Target* Oscar Meyer*

Chili’s Sonic* Sodexo* Whole Foods Williams Sausage

Cracker Barrel Tim Hortons Royal Caribbean* Winn Dixie

Denny’s Wendy’s Trusthouse*

Dine Equity* Wienerschnitzel*

*denotes a firm commitment to a date.

2012 2008 2003 2013

2013

100% Committed to a Date 2015 2017 2020 2022 2025

Unclear/Non-Specific

Commitments

2008: 5% per

year for 3 Years

“plans

by 2017”

“20%

over time”

“formulating

plans” “encouraging

suppliers”

“It will take time.”

“working with

Suppliers”

“formulating a

plan”

“shifting away”

“within

10 years”

“discussions

complete by 2022”

“working with

Suppliers”

“substantial majority

In 5-7 years”

“determining

a timeline” “over time”

“solution

by 2022” “could take

ten years”

“continue

working” “committed to

suppliers”

“actively collaborating

with suppliers”

“could take up to

ten years”

“could take up to

ten years”

“directing suppliers

by 2018”

Two Tiered Pricing

• Costco

• Safeway

• Sysco