Changes In Meat Exports Matter
The U.S. livestock and poultry industries have become increasingly dependent on exports in recent years. As a result, disruptions in trade flows can have a significant impact on the quantity of meat marketed to U.S. consumers. U.S. livestock producers learned that lesson the hard way this year when beef exports to Japan declined sharply, because of Japanese consumers' BSE fears, and Russia banned imports of U.S. poultry. Future growth in U.S. meat exports will be important if the U.S. livestock sector is going to rebound from the 2001-2002 price downturn.

As recently as 1985 the U.S. exported just 331 million pounds of beef (carcass weight), which was the equivalent of 1.4 percent of U.S. beef production that year. During the late 1980s and 1990's beef exports grew dramatically. By the turn of the century, beef exports were more than 7 times as large as they were in 1985, reaching 2.4 billion pounds, equal to about 9 percent of U.S. beef production. During 2001 beef exports dipped below the prior year, totaling 2.3 billion pounds, about 8.7 of U.S. beef production.

Growth in beef exports paralleled growth in pork and poultry exports as rising incomes increased foreign consumers' appetite for meat. From 1987 to 2001, U.S. pork exports increased 14-fold and broiler exports rose 7-fold. As a result, pork exports during 2001 were the equivalent of 8.2 percent of U.S. pork production. Exports were even more important to the chicken industry, rising to the equivalent of 18.5 percent of U.S. chicken production during 2001.

The largest consumer of U.S. beef and pork is Japan, whereas the largest importer of U.S. broilers is Russia. Over the last five years Japan's share of U.S. beef and pork export tonnage was 48 and 44 percent, respectively. Over the last five years, Russia's share of U.S. broiler export tonnage averaged 32 percent, and was actually over 40 percent twice (1997 and 2001).

Several factors are responsible for the dramatic growth in meat exports since the mid-1980's. As mentioned previously, consumers around the world want to improve their diets by shifting some of their consumption away from cereals to meat. Rising incomes in importing countries, shipping technology improvements that made shipping meat more cost effective, and lower trade barriers all combined to help consumers in importing countries increase their meat consumption. But another factor has also affected U.S. meat exports; currency exchange rates.

Exchange Rates Are Important
Currency exchange rates matter because they affect the price consumers in importing countries pay for U.S. meat. To better grasp the impact exchange rates can have, it's worthwhile to examine changes in the value of the U.S. dollar, relative to the Japanese yen. In 1985 it took 238 Japanese yen to purchase one U.S. dollar, making imports of U.S. beef and pork relatively expensive to Japanese consumers. But the value of the U.S. dollar declined throughout most of the late 1980's and 1990's. By 1995, it took just 94 Japanese yen to purchase one U.S. dollar, a 60 percent decline in the span of a decade. The declining value of the U.S. dollar from the mid-1980's to the mid-1990's helped make U.S. meat products much cheaper in Japan than otherwise would have been the case and was partly responsible for the dramatic growth in U.S. beef and pork exports that took place. Since the mid-1990's the value of the U.S. dollar climbed from it's 1994 low of 94 yen to the dollar to 128 in 2001. Not coincidentally, U.S. beef export shipments to Japan stagnated in the 1 to 1.1 billion pound range from 1995 to 2001.

Recently, however, the value of the U.S. dollar has again been in the news. During January-March 2002 it took 132 Japanese yen to purchase one U.S. dollar. But as the U.S stock market unraveled this spring, the dollar's value declined more than 10 percent, averaging about 119 yen/dollar during early July. So, a weaker U.S. dollar will make U.S. meat products cheaper to Japanese consumers and could provide a welcome boost to U.S. meat exports later this year. ©