Decline in Ground Seasoned Pork Exports Underscores Need for Tariff Relief in Japan

The latest U.S. pork export results (for May) showed an uptick in shipments to Japan, the leading value destination for U.S. pork. After trending lower through the first four months the year, May pork exports to Japan increased 5% from a year ago to 36,373 metric tons, while export value ($148.6 million, up 3%) was the highest in 18 months. But January-May exports to Japan were still below last year’s pace, and U.S. Meat Export Federation (USMEF) Economist Erin Borror explains that this is largely due to a decline in U.S. shipments of ground seasoned pork – a product Japanese processors use as an ingredient for sausages.

Borror notes that U.S. ground seasoned pork faces a 20% duty rate in Japan, while competitors such as the European Union, Canada and Chile pay 13.3% due to recent trade agreements. For the first five months of this year, Japan’s imports of U.S. ground seasoned pork fell by $46 million year-over-year and U.S. market share dropped from 67% to 57%.

On a positive note, Japan’s tariff reductions have helped fuel an increase in pork imports and pork consumption, so Borror sees outstanding growth opportunities in the pork sector if the United States is able to secure a trade agreement with Japan.

Transcript

Joe Schuele: The latest export data show that U.S. pork is holding its own in the Japanese market despite significantly higher tariffs than those faced by competitors such as the European Union, Canada and Chile. But U.S. Meat Export Federation Economist Erin Borror explains that exports of ground seasoned pork have been hit hard by this tariff disadvantage. She has more details in this USMEF report:

Erin Borror: We were encouraged to see bigger U.S. exports of pork to Japan and especially in the chilled category. Those chilled volumes are holding roughly steady with a year ago, but what we’re most concerned about is a category of ground seasoned pork. It’s a high value product but it’s used as a raw material for input into Japan’s sausage making, so it’s extremely price-driven, price-competitive, and our tariffs are still 20% while our competitors are at 13.3% and that’s led to a direct drop in Japan’s imports of this product from the United States — a decrease of about $46 million just in the first five months of the year. And it’s been a loss in U.S. market share in that category from 67% to 57%. In the past we were really the dominant supplier with over 70% share and a category that we see as still having potential in the future if we can return to a level playing field.

Joe Schuele: On a positive note Borror sees outstanding opportunities if the U.S. can secure a trade agreement with Japan:

Erin Borror:The Japanese market for pork imports is still growing; their pork consumption is actually still growing and Japan is reducing and eliminating tariffs on all processed pork products and so big opportunities. This gets really exciting if we think about the U.S. having again the same market access terms as our competitors because we can imagine Japan buying more and more of these value-added processed products that have been mostly produced in Japan because of high tariffs that have kept the Japanese market limited to mostly imports of chilled and frozen and ground seasoned pork.

Joe Schuele: For more information, please visit USMEF.org. For the U.S. Meat Export Federation, I’m Joe Schuele.