Livestock Exports On The Horizon —Oasis Or Mirage?

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To us there is a disconnect between agricultural export expectations in this country – particularly with regard to meats – and the stated intentions and market actions of China and Russia, the very countries being touted as U. S. agriculture’s export saviours.

National Pork Producers Council (NPPC) vice-president Nick Giordano reportedly told the recent Minnesota Pork Congress meeting that “there is no greater money-making opportunity for U. S. pork than China,” calling it the “mother lode.”

Pork exports to China skyrocketed in 2008 as the Chinese prepared to feed the influx of foreign visitors attending the 2008 summer Olympics at the very time China’s domestic pork production plummeted due to disease outbreaks and weather-related death losses.

Despite the ban on U. S pork imports over the H1N1 and continued drug-related issues, U. S. short-term optimism apparently presumes elimination of the ban and return to the glory export days of 2008.

But word from those familiar with China’s thinking on agriculture suggest that such optimism is likely overdone.

Chenjun Pan, senior manager of Rabobank in Beijing, says in a press release that “China is unlikely to rely on pork imports.” Don Roose, an Iowa commodity analyst, says China may lift the ban to provide a relief valve should disease problems reappear. But, “China wants to be self-sufficient,” he said in Dow Jones article, “and it is currently well stocked with pork.”

Meanwhile, MeatingPlace.com

reports that “two leading Chinese and Japanese food-processing companies have started a chicken-raising project in China’s Henan province that will be able to produce 300,000 tonnes of feed, 50 million chickens, and 120 million tonnes of chicken meat products every year.”

Yes, China has one-sixth of the world’s population, but it has shown no indication that it intends to depend on U. S. producers for pork and poultry.

Yes, similar to 2008, China could need to cover short-term needs again, but in our opinion a clear-eyed look at its history and stated intentions indicates that China’s goal is to become virtually self-sufficient in meat.

RUSSIA AIMS FOR SELFSUFFICIENCY

Giordano told the Minnesota Pork Congress that “NPPC not only wants to reach an agreement with Russia, it wants to increase the U. S. quota share as a condition of (Russia’s) World Trade Organization accession.”

But while he was making his speech, Russian leaders announced that their country was working to be self-sufficient in pork production by 2012. In addition they have stated that they intend to eliminate all poultry imports by 2015.

These goals of the Russian government are a part of a new food doctrine that treats food as an issue of national security.

Many of us are old enough to remember how Russian grain imports in the early 1970s – some call it the Great Grain Robbery – created a short period of prosperity for U. S. grain farmers who tore out fence rows and shelterbelts to maximize their production. Today, Russia is self-sufficient, or nearly so, in grain production.

While Russia might not reach the 2012 and 2015 goals for pork and poultry, there is little reason to doubt that the goal of food security is not beyond its reach.

Time and time again we have seen U. S. exports fail to meet the expectations of U. S. producers. It is easy to overdo it.

We all like to produce and want to be believe optimistic, if not pie-in-sky, assertions about export growth in the future. While producers can increase production relatively quickly when increased export demand drives prices up, it is the ratcheting back of production that is painful when exports fall off. Grain producers know all about that.

The way things are shaping up, it looks like livestock producers, especially pork and poultry producers, may be the next set of agricultural producers that are invited to peer yonder at an export oasis. We hope that such an oasis in a desert of traditionally low and uncertain profits is real and not a mirage.

Daryll E. Ray holds the Blasingame Chair of Excellence in Agricultural

Policy, Institute of Agriculture, University of Tennessee, and is the

Director of UT’s Agricultural Policy Analysis Center www.agpolicy.org.His column is written with the research and assistance of

Harwood D. Schaffer.

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