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USA exports

Meat exports not at expense of domestic needs

Leading meat processing companies respond to characterizations that exports taking away from potential domestic meat supply.

Meat processing companies have been under fire for allowing increased exports in recent months while the COVID-19 pandemic caused a strain on the domestic meat supply, including an increase in prices at the grocery store due to meat processing plant shutdowns. However, Smithfield, Cargill and Tyson detailed the actions they are taking that show they’re not foregoing domestic demand to export meat products.

At the start of June, the U.S. Meat Export Federation reported a record amount of pork – 129,000 tons – being shipped to China. Overall, the share of meat exported by pork producers jumped to 32% from an average of 25-27% in the first four months of this year, largely due to demand from China.

A letter from Sens. Elizabeth Warren (D., Mass.) and Cory Booker (D., N.J.) blamed the four largest meat processing companies for exporting record amounts of product to China at the same time they “were warning of shortages, endangering your workers and dramatically increasing prices for American consumers.”

The letter stated, “In total, your companies exported more than 1.3 billion lb. of beef and pork from March 20 through early June," and “the amount of beef and pork products exported over that time period actually exceeded the amount of lost production” from COVID-19-related problems.

The U.S. produced approximately 2.94 million metric tons of pork from March through May, down 5% year over year, Smithfield reported. The U.S. exported 199,959 metric tons of pork and pork variety meats to China in March and April, up 282% year over year. “Our corresponding percentage increase was much lower than the industry in totality,” Smithfield said. “Not including China, the U.S. exported 342,304 metric tons of pork and pork variety meats to the rest of the world in March and April, down 6% year over year.”

In the normal course, the U.S. has an abundant surplus of meat and produces roughly 25-30% more pork than can be consumed within our shores, Smithfield president and chief executive officer Kenneth Sullivan stated in Smithfield’s response.

A good portion of what is exported are items that attract little or no interest from domestic consumers. These include the byproducts from the pork production process like pig tongues, hearts, livers, kidneys, stomachs, bladders, uteri, snoots, ears, feet, tails and underutilized muscle cuts like large hams, for example, that find homes in export markets like China and Mexico because of low or seasonal demand in the U.S.

A Tyson spokesperson also said, in recent months, the company has prioritized supplying meat to the U.S. market and voluntarily curtailed shipping pork export items that are also in demand from domestic consumers to try to meet U.S. demand.

“Many of the pork products we sell internationally are specialty products that have extremely limited use in the United States, such as snouts, feet, ears and organ meats. The export sale of these items adds considerable value to the overall price of hogs for U.S. farmers,” the Tyson spokesman said. “Year to date in our current fiscal year (October to May), our pork exports to China represent only about 3% of our total pork production.”

Sullivan explained that various primal cuts do not have equal demand in the U.S. Bellies, for example, have historically been in high demand in the U.S. because Americans love bacon. This is not so much the case for whole bone-in hams.

“When you harvest an animal, you harvest the entire animal. Consequently, every pig harvested for U.S. consumption also generates export products. There will always be exports even in a time of shortage in the U.S. For the most part, the U.S. does not export packaged meats products like bacon, ham and sausage and no packaged meats products at all are shipped to China from the U.S.,” he said.

American farmers are reliant on robust export markets. Consequently, production facilities are designed and configured to produce products to export specifications, and 25-30% of production is exported under normal circumstances. Converting export lines back to domestic retail lines takes time. This often entails specific production equipment, staffing, training, packaging equipment and stock, labeling, etc.

“Because these lines and, indeed, some entire plants are specifically designed for a particular trade channel (retail, foodservice or export), production cannot be turned on and off like a light switch,” Sullivan said.

The manufacturing specifications and packaging are completely different for retail and foodservice products, Sullivan noted. In the same way, export production lines set up to ship three-piece frozen carcasses to foreign destinations cannot immediately convert to domestic production because conversion requires engineering new production flows, installing new cutting equipment, hiring and training additional staff, etc. “The time to convert lines is typically measured in months under the best of circumstances, never mind during a global pandemic,” he wrote.

Industry players have begun modifications to convert lines to domestic production, Sullivan said. “Indeed, we announced back in early May our intention to retrofit lines in a major plant from carcass export to domestic production. We have spent over $20 million first installing and now converting it back to domestic production. We said then we would be ready by July,” Sullivan said, adding that Smithfield is on schedule, although labor availability is a concern.

“The bottom line is surplus and byproducts are sold in export markets, not the other way around. We would never manipulate something as important to our country as the food supply and give preference to foreign customers,” Sullivan stated.

Cargill also responded to the reports of choosing foreign destinations over domestic consumers as well as sourcing foreign animals for processing.

During the March 1-May 31, 2020, time period, the volumes of Cargill’s total beef exports and total turkey exports were down in comparison to the same period in 2019, and this decrease has continued through the first three weeks of June. Additionally, its boxed beef exports to Hong Kong are down more than one-third during this period, and it has not exported any beef or turkey from the U.S. to China in 2020, Cargill said in its response to the senators.

“At Cargill, we take seriously our responsibility to feed the world. As essential workers, our employees are on the frontlines of delivering food to people across our communities amid the COVID-19 crisis. While there have been disruptions as a result of COVID-19, we are confident in the resiliency of the food system. As we navigate the heartbreaking impacts of this pandemic, Cargill is working around the clock with farmers and our customers – the world’s food retailers and service providers – to continue delivering the food we all need to stay healthy and nourished,” a Cargill spokesman said.

In addition, “there has been no increase in livestock brought in from outside of the United States. All of our turkeys and fed cattle are sourced from U.S. growers, producers and feedlots,” Cargill added.

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