The growing global economic crisis is putting the brakes on exports of U. S. beef and pork and it may be early next year before conditions improve, says a Cargill meat official.
“Globally, people’s confidence is much lower than it has been. People are worried about their jobs and worried about money,” Patrick Binger, assistant vice president for international sales at Cargill Meat Solutions, said in a telephone interview Oct. 29
“So all of that impacts consumption. We are seeing a slowdown in just about every market.”
Cargill Meat Solutions is the second largest U. S. producer of beef and pork behind Tyson Foods Inc.
Exports of U. S. beef and pork have been strong much of this year, which helped meat companies like Cargill, Tyson and Smithfield Foods Inc cope with higher costs for feed and fuel.
But that business is now slowing. One area of concern is Russia, where tight credit combined with falling oil prices has eroded buying power.
Russia recently had become an important market for U. S. beef and pork as higher oil prices earlier this year helped it buy more.
“Everybody is suffering from the global meltdown. Credit is tight in many places and banks are very cautious about their lending,” Binger said. “Russia is feeling the same thing.”
While meat exports to Russia and other markets often slow late in every calendar year, as buyers get close to filling annual import quotas, Binger said the slowdown this year has been more severe.
“I would say it is slower than normal and it slowed quicker than it had in the past,” he said.
Year-to-date through August Russia had bought $302 million worth of U. S. pork, versus $109 million in 2007, and $67.55 million worth of beef, versus $2 million in 2007, according to data compiled by the U. S. Meat Export Federation.
Exports are important to the U. S. meat industry and in 2007 accounted for 7 per cent of beef production, 23 per cent of pork, and 18 per cent of chicken.
Also, exports of all three meats were up significantly in the first eight months versus the same period in 2007, industry data shows.
Binger said it may be early 2009 before conditions improve for meat exports.
“After the first of the year, I would expect it to get better. Right now there is a lot of fear in the market, by most everybody around the globe,” he said.