Exports are the key for protein producers
November 16, 2018
Trade, Randy Blach, CattleFax told protein producers at the Northeast Livestock Symposium hosted by the Colorado Livestock Association, is the key to the protein industry's success. In an economy in which the U.S. exports 41 pounds of protein in the form of beef, pork, and poultry, per person, producers depend upon exports.
Annually, the U.S. exports 17 billion pounds of beef, pork and poultry which adds up to 23 percent of the pork produced in the states, 18 percent of the poultry produced, and 14 percent of the beef produced. Over the past three years, Blach said beef exports have increased by double digits each year, a major reason this market is as good as it is. Beef exports in 2015 totaled 2.2 billion pounds whereas in 2018 exports totaled 3.2 billion pounds.
"We've grown a billion pounds from an export standpoint, which has kept per capita beef supply in check," he said. "Domestic demand has been very good, don't get me wrong, but export demand has been fantastic on the beef market."
Blach said in addition to a rise in exports, the quality of beef produced has increased as well, driving domestic and international demand and allowing absorption of production increases in the domestic marketplace. The U.S. is producing 11 billion pounds of protein more today than five years ago, making the export market key.
"When exports are really good is when we benefit," he said. "Think back to 2015 when exports fell off the planet on all the proteins."
In 2015, protein exports dropped by 12 percent, resulting in a year of disappointing cattle prices that was even more devastating when combined with a 9-pound increase in per capita supply.
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"You don't have to think back very far, they will all remember that year when the market just flat came apart," he said.
From 2000 to 2005, about 50 to 55 percent of U.S. beef was grading choice and prime, compared to about 80 percent currently, a change Blach calls dramatic.
The lion's share of beef exports are going to South Korea, Japan, Mexico, Canada and Hong Kong, with the strongest of those markets being South Korea. With beef exports up 11 to 12 percent in 2018, Blach said it's difficult to see much effect on the market of retaliatory tariff damage. The protein most affected by the tariffs was pork, which Blach said could see effects from China's current disease outbreak.
As swine flu spreads across China, many are speculating the disease's impacts upon the country responsible for over half of the world's pork supply.
"If it continues to spread and they can't get their arms around it, there could be significant losses in hog numbers and pork production in that region which would require more imports from other pork-producing countries to help build the shortage," he said. "It's pure speculation what that will look like, none of us know. That's going to be an evolving story over the course of the next six months."
Lab produced protein, Blach said, is here to stay though he doesn't anticipate it replacing the current protein production.
"As it gets cheaper and cheaper and that technology continues to get better, there are areas that will never be self sufficient and able to raise enough high-quality protein to meet the needs of their population," he said. "That's where there are some niches."
The current U.S. beef cow herd is about 32 million head with an additional 9 million diary cows bringing the total herd size to 41 million head, a number Blach said he expects to level off in the next two years. The current herd is 15 million head smaller than it was in the 1970s and produces 3 billion more pounds of beef than it did at its peak in the 70s.
"Nutrition, animal health, technology — that's how we do that," he said. "We run more efficient operations, we wean more live calves, we take more pounds. It's a great, great story of how much more sustainable our industry has become over time." ❖
— Gabel is an assistant editor and reporter for The Fence Post. She can be reached at firstname.lastname@example.org or (970) 392-4410.