Economic Impact of U.S. Pork Trade, 1986-2012

Ron Plain, Professor of Agricultural Economics, University of Missouri-Columbia

Dept. of Agricultural & Applied Economics Working Paper No. AEWP 2013-2

The changes in U.S. pork trade in the past 27 years are dramatic. U.S. pork exports have grown from 86 million pounds carcass weight equivalent in 1986 to 5.383 billion pounds in 2012, an increase of 6159%. During this period, U.S. pork imports declined by 28%. The U.S. has gone from importing 1.036 billion pounds more pork than we exported in 1986 to exporting 4.581 billion pounds more pork than we imported in 2012 (Table 1). In 2012, exports equaled 23.15% of U.S. pork production and imports equaled 3.45% of production.

The value of pork and pork byproduct exports has grown from $1.97 per hog slaughtered in 1986 to $55.87 per head slaughtered in 2012 (Table 2).

Japan is the largest U.S. pork customer, purchasing 25.6% of our exports in 2012. Mexico is a close second. Combined these two countries purchased 10.9% of total 2012 U.S. pork production. China and Canada are third and fourth in pork purchases from the U.S. Table 3 shows our most important foreign pork customers in 2012 by their percentage share of U.S. pork exports purchased based on carcass weight equivalent.

Changes in trade have permitted the pork industry to grow at an average additional rate of 1% per year over the last 27 years. The U.S. pork industry was 24 million head larger in 2012 than it would have been had pork imports and exports remained at 1986 levels.

Not only has the changes in the quantity of pork traded allowed faster growth of the U.S. pork industry, but it has also added to producers' incomes in the years when net exports grew. Table 4 shows our effort to calculate the effect of imports and exports on the price of hogs. Using a demand elasticity of -0.3, we assume a 1% increase (decrease) in net exports as a share of total U.S. pork production will result in a 3.33% rise (fall) in hog prices. We also assume that changes in pork trade are not anticipated and any herd size change due to price changes are fully accomplished in 12 months. The total income of all U.S. pork producers has been improved by $11 billion over the last 27 years due to the increase in net exports (Table 4).

Pork producers can take credit for much of this export growth. They have funded foreign promotion efforts and improved the quality of pork which has made it more competitive on world markets. Efforts by the U.S. government to liberalize trade, as well as improved per capita incomes in many countries are also important factors in increasing exports.

Three major groups in the U.S. have contributed to the promotion of pork exports. They are USDA, the U.S. meat packing industry, and hog producers. Pork producers alone have spent $90.6 million in the last 26 years to promote exports through Pork Checkoff funds. Less than 1% of the $11 billion benefit from increased pork trade since 1986 would be required to repay the $90.6 million in Checkoff money spent on export promotion during this period.

Table 1
U.S. Pork Imports and Exports
(million pounds of carcass weight equivalent)

Table 2
Value to the Pork Industry of U.S. Pork and Byproduct Exports
Per Head of U.S. Hog Slaughter

Table 3
U.S. Pork Exports by Country in 2012
Percent Share of Tonnage

Table 4
Checkoff Funding of Export Promotion, Net Pork Trade as % of U.S. Production, and Estimated Benefit to Producers from Changes in Exports and Imports

This study was originally done by Glenn Grimes and funded by the University of Missouri and the National Pork Board.

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