News & Events | H1N1 Influenza Update: Demand Reports Mixed, but Pork Holding Up Well in Most Markets...

H1N1 Influenza Update: Demand Reports Mixed, but Pork Holding Up Well in Most Markets

In addition to market closure updates, USMEF staff in overseas markets will provide periodic updates on changing conditions in those nations.

JAPAN

In the No. 1 international market for U.S. pork, there is no evidence of drastic change in the situation with regard to the H1N1 virus. The government of Japan and USMEF have been successful in cooperatively sending out the positive message to the food industry and the media that pork is safe.

There have been anecdotal reports of declining pork demand in Japan, but contacts with several major retailers by USMEF-Japan staff during the Golden Week national holiday period (May 1-5) do not show results that wouldn’t be expected during the extended holiday. The Japanese government dramatically slashed highway tolls for the holiday period (normally 4,000 to 5,000 yen or $400 to $500 each way on an extended automobile trip) to a flat rate of 1,000 yen, which is encouraging more extensive travel and reduced grocery store purchases. There are reports of traffic jams more than 80 kilometers (nearly 50 miles) long in Japan.

One major Japanese retailer, which has most of its outlets in the Tokyo area, reported that overall pork sales have been down about 5 percent over the Golden Week holiday period. They attribute that to the fact that the holiday is longer this year than last year, and that more people are traveling outside of Tokyo. The retailer indicated that it expects pork sales to be higher today and the rest of the week as people return to Tokyo.

That same retailer did note that U.S. pork sales are down 10 percent to 15 percent from last year, but indicated that this is not related to the flu. The retailer experienced significantly higher U.S. pork sales last year, and U.S. pork is competing with domestic pork that has seen its price fall much lower this year compared to a year ago. The retainer stated that it has not been conducting any pork promotions over the Golden Week period, but USMEF-Japan will be working with the retailer to resume promotions soon.

A second major Japanese retailer informed USMEF-Japan that its total pork sales are down about 20 percent from last year, but that U.S. pork sales are up 10 percent during the holiday period. It has been working with USMEF-Japan on U.S. pork promotions during Golden Week, helping offset the impact of the holiday.

This same retailer reports that its customers have not been afraid of buying pork, and they do not think the overall decline in pork sales is related to the flu. They believe that some of the overall decline may be related to the number of people traveling out of the major metro areas over the holiday and, again, because of comparison to large pork sales last year.

While sales will vary by retailer by week, one consistent trend in Japan in 2009 has been an increase in domestic pork sales because of lower domestic prices, but this was evident even before the discovery of the H1N1 flu virus.

USMEF-Japan believes that some of the reports of declining U.S. pork sales in Japan can be traced to importers, who try to gain leverage with the perception of declining demand when negotiating price with U.S. pork packers.

As for domestic prices, there has not been any reporting this week because of the holidays, but reports will resume tomorrow. There are reports that recent hog prices are down about 10-20 cents/lb on a live hog basis compared to one month ago. The overall hog market has been slow since early 2009 with an estimated pork inventory of 50,000-70,000 metric tons (110 million pounds to 154 million pounds) as opposed to 30,000-40,000 metric tons (66 million pounds to 88 million pounds) for a normal season.

Meanwhile, no reductions or cancellations of U.S. or Mexican pork by retail or foodservice companies have been reported by the media. The Japanese government’s pressing of the private sector to continue business in imported and domestic pork has been extremely helpful. This has deterred any businesses from taking a negative approach to imports.

SOUTHEAST ASIA

Little change is reported in pork demand at foodservice. Pork dishes are still being advertised in newspaper restaurant promotions for Mother's Day and the World Gourmet Summit, a well-publicized annual culinary event in Singapore this week.

At retail, most pork prices in Singapore are being maintained but minimal featuring of pork is seen in weekly supermarket promotions.

According to importers in Singapore and the Philippines, local pork processors shied away from U.S. pork in the past week. Besides the impact from influenza, a few cases of U.S. pork rejection have occurred due to bacteria count and quality specifications.

Live hog prices in the region are $2.2/kg in Vietnam, $1.82 /kg in Malaysia and $2.18 in the Philippines. Sow prices in Malaysia sank as low as $1/kg for this week but should pick up by mid-May in response to a festival celebration for which rice dumpling dishes will utilize pork belly and boneless picnic shoulder in large amounts.

USMEF is staying in close contact with industry officials and FAS offices to monitor the situation in Indonesia, Thailand and Malaysia, which have all suspended imports of U.S. pork. In these markets, U.S. pork market share has not only been reduced, but overall pork consumption has also declined. Fortunately, however, most ASEAN government officials have conveyed a clear message that it is safe to eat pork as long as it is properly prepared.

MEXICO

In Mexico, foodservice has been the hardest hit of the marketing channels for U.S. pork. All restaurants have been closed for almost a week, and even prior to closure many consumers had avoided them.

Tourism has been dramatically reduced with hotel occupancy rates down 40 percent to 50 percent. While a relatively low percentage of U.S. pork is sold through foodservice, a significant decline in demand is apparent.

Packers are reporting a downturn in pork production and sales, with processed meats providing the only bright spot. Supermarkets are reporting an upswing in purchases of poultry and beef, mostly during the early period when misinformation about pork was more prevalent. This could have a lingering effect on demand, as meat might be stockpiled in consumers’ refrigerators.

Despite pressure from local producers to impose trade restrictions, Mexico remains fully open to U.S. meat products. Government officials appear most focused on reopening foreign markets for Mexico’s exports, and have displayed no movement toward protectionist measures. USMEF remains very engaged on this issue, however, since Mexico is the No. 1 combined volume market for U.S. pork and beef. We believe our interaction with government officials and a unified message on the need to rebuild pork demand has been helpful in securing a favorable outcome.

Overall, economic activity in Mexico is expected to begin picking up in the coming week. High schools and universities are restarting today. All younger students will return to school on May 11. There are 33 million students nationally.

Restaurants also are reopening today in Mexico City. Before restaurants reopen, they must make specific changes, including stationing an employee at the entrance of the restaurant with a thermometer to check the temperature of customers, and allowing two meters space between tables

Carnival Cruises has indicated that it has reprogrammed its routes around Mexican ports until June 15. And six hotels in Cancun (accounting for 3,000 rooms) will reportedly suspend their activities during the low season from May to June.

EUROPE

From Europe, reports are mostly positive as demand for U.S. pork remains robust in most countries. While several European nations have now confirmed human cases of H1N1 influenza, no adverse reaction to pork or other foods is apparent.

“Like most areas of the world, Europe is weathering some economic sluggishness due to the economic crisis,” said John Brook, USMEF regional director Europe, Russia and the Middle East. “While there is some public concern about H1N1 Influenza, it’s really been a nonevent for food consumers.”

RUSSIA

Even in Russia, one of the most aggressive countries in trade suspensions, USMEF staff report little change in pork consumption. Yet even as public health officials reassure Russian citizens about the safety of pork, Russia has closed its border to pork imports from several U.S. states and a growing list of European nations.

“The good news is that Russian consumers ‘get it’ – there’s no connection between pork consumption and the H1N1 virus,” said Brook. “The bad news is Russia is denying access to the market when it clearly understands there is no scientific basis for doing so.”

SOUTH KOREA

South Korea has not suspended pork imports, but has increased screening and inspection of pork from the United States and Mexico. South Korea has only suspended imports of live swine from North America. However, USMEF-Korea reports that the Korean government has changed the test method it is utilizing on pork imports from the traditional cultivation method to PCR. As a result, test results can be produced much more quickly – within 2 to 3 days instead of 18 to 21 days. Thus far, all test results from U.S. pork imports have been reported as “clean.”

MIDDLE EAST

Egypt

With regard to last week's decision of the Egyptian Ministry of Health to slaughter virtually all pigs in Egypt, reports indicate the Cabinet met with the President Mubarak and decided to start the slaughtering process immediately using the full capacity of the country's slaughterhouses as a precaution against swine flu, even though no cases have been reported in Egypt.

Global health experts said the mass slaughter of pigs was unnecessary and a waste of resources, but Egypt's reaction was colored by its experiences with bird flu, which hit the nation hard in 2006. The latest measure was a stark expression of the panic that can easily spread around the world, especially in poor areas with weak public health systems.

Egyptian health authorities have declared that humans cannot contract the flu by eating pork, but the slaughtering of pigs continued with a stubborn grip. According to Egypt’s chief veterinary officer, pigs are slaughtered and frozen and the pork meat will be used. No action is yet taken as to sows and their newborns. Most likely, the government will work with the pig farmers in the northern suburbs of Cairo to move their farms outside the city.

Farmers demanded compensation for their slaughtered pigs. The provincial government decided to pay them around $180 per head.

In Egypt, pigs are raised and consumed by a minority of the population. Most of the Muslim world considers pigs unclean animals and does not eat pork because of religious restrictions.

Lebanon

The media have reported that Lebanon is set to create a national emergency committee to deal with a potential flu pandemic. According to the General Director of the Ministry of Health (MOH), Dr. Walid Ammar, the committee will be headed by the MOH and it will include different ministries and security forces. The committee will be formed today or tomorrow and will be permanent. Lebanon is said to be well-prepared to cope with the situation. It has a good health care system and the capacity to deal with influenza cases.

The World Health Organization (WHO) representative in Lebanon, Dr. Houssain Abouzaid, said that a WHO assessment of Lebanon's capacity to implement global health regulations, carried out two months ago, had put Lebanon in a good position to react to the virus. The WHO has recommended a prototype contingency plan to the Lebanese MOH which will be adopted by the national committee. The WHO is preparing information leaflets detailing the symptoms of the illness and the way in which it is spread. The leaflets will be distributed at the airport, the ports and by NGOs working across Lebanon.

It's worth mentioning here that no particular measures have been taken so far to restrict travel, although thousands of Lebanese live abroad, particularly in Mexico, the epicenter of the outbreak. Nevertheless, arrivals coming from an epidemic area will be monitored.

Bahrain

Bahrain has banned the import of pork and pork products from Mexico and most of the United States. Products will also be banned from other countries if confirmed cases of H1N1 Influenza are found.

The ban notification, issued by the Municipalities and Agriculture Ministry, has come into effect since Tuesday April 28, 2009, according to Dr. Khairya Moosa, Director of Public Health at the Ministry of Health. The ban has been imposed despite the WHO declaration that swine flu cannot be contracted by eating pork.

Meanwhile, supermarkets selling pork and products containing pork have not pulled them off the shelves.

"This order does not ban us from selling pork and only bans imports. We shall sell what we have and clear our shelves and not stock up until the ban is lifted", said an official at Al Jazira Supermarket in Bahrain.

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The U.S. Meat Export Federation (www.USMEF.org) is the trade association responsible for developing international markets for the U.S. red meat industry and is funded by USDA, exporting companies, and the beef, pork, corn and soybean checkoff programs.