Economic Impact of U.S. Pork Trade, 1986-2014

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

There has been a dramatic increase in U.S. pork exports in the past 29 years. U.S. pork exports have grown from 86 million pounds carcass weight equivalent in 1986 to 4.858 billion pounds in 2014, an increase of 5649%. During this same period, U.S. pork imports declined by 10%. The U.S. has gone from importing 1.036 billion pounds more pork than we exported in 1986 to exporting 3.851 billion pounds more pork than we imported in 2014 (Table 1). In 2014, exports equaled 21.27% of U.S. pork production and imports equaled 4.41% of production.

In 2014, the U.S. exported $6.674 billion of pork and pork variety meats. The value of pork and pork byproduct exports has grown from $1.97 per hog slaughtered in 1986 to $62.45 per head slaughtered in 2014 (Table 2).

For more than 25 years prior to 2014, Japan was the largest foreign buyer of U.S. pork. In 2014 Mexico replaced Japan as the largest U.S. pork customer, purchasing 28.4% of our exports. Japan purchased 25.3% of our exports. Combined these two countries purchased 11.4% of total 2014 U.S. pork production. Canada and South Korea are third and fourth in pork purchases from the U.S. Table 3 shows our most important foreign pork customers in 2014 by their percentage share of U.S. pork exports purchased based on carcass weight equivalent. Table 4 shows sources of pork imports by market share.

Changes in trade have permitted the pork industry to grow at an average additional rate of 0.8% per year over the last 29 years. The U.S. pork industry was 25 million head larger in 2014 than it would have been had pork imports and exports remained at 1986 levels.

Not only has 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 5 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 $9 billion over the last 29 years due to the increase in net exports.

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 foreign 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 $104.2 million in the last 28 years to promote exports through Pork Checkoff funds. Just slightly over 1% of the $9 billion benefit from increased pork trade since 1986 would be required to repay the $104.2 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 of U.S. Pork and Byproduct Exports
Per Head of U.S. Hog Slaughter

Table 3
U.S. Pork Exports by Country in 2014
Percent Share of Tonnage

Table 4
U.S. Pork Import by Country in 2014
Percent Share of Tonnage

Table 5
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.

[ AgEBB ] - [ Farm Marketing ]