Historic, Archive Document Do not assume content reflects current scientific knowledge, policies, or practices. Outt A) 7 . /) J-7 United States <•- Agricultural Trade Department of Agriculture H n Highlights Foreign Agricultural in Service Circular Series ATH 11 93 -< November 1993 September Exports Drop 5 Percent reached record highs, while shipments to Egypt also increased over fiscal Fiscal 1993 Closes at Near Record $42.5 Billion 1992. However, shipments to the former Soviet Union were off by 46 percent, while exports to the EC and South Korea recorded modest declines. U.S. agricultural imports for fiscal 1993 reached a record $24.5 billion, up slightly from fiscal 1992 levels. With the 1993 export gain roughly equalling the import gain, the fiscal 1993 agricultural trade surplus was roughly unchanged from last year at $18 billion. On November 30, the World Agricultural Outlook Board released its fiscal 1994 projections for U.S. September trade statistics released on U.S. exports of intermediate products agricultural trade. Export value is November 19 by the Commerce were $8.9 billion for the fiscal 1993, expected to be unchanged from 1993 at Department placed the value of U.S. finishing $300 million below the record $42.5 billion, with record sales of agricultural exports at $3.2 billion, set last year. Export gains for wheat horticultural and livestock products down five percent from the same flour, animal fats and vegetable oils forecast to offset heavy declines in month last year. A significant drop in (other than soybean oil), were more wheat shipments. Fiscal 1994 U.S. shipments of soybeans and products, than offset by decreases for live agricultural imports are forecast to com, live animals and animal fats more animals, soybean meal and oil, hides remain unchanged from 1993 at $24.5 than offset sharply higher shipments of and skins, and sugars and sweeteners. billion. consumer-oriented high-value products. Feeds and fodders reached a new record high of $1.7 billion. September's results bring fiscal 1993 to Inside This Issue... a close, with agricultural exports At $14.6 billion in fiscal 1993, U.S. Page reaching $42.5 billion, up a modest exports of consumer-oriented products $200 million from last year. Fiscal climbed $1.1 billion from the record Consumer Food Highlights . 3 1993 was the second highest year on last year. Increases in fiscal 1993 were PRODUCT SPOTLIGHT: record, exceeded only by 1981's figure broad-based with 12 of the 16 product Fresh/Chilled Beef & Veal 5 of $43.8 billion. categories setting new record highs, led COUNTRY SPOTLIGHT: Japan. 8 by snack foods, dairy products, fresh At $18.9 billion in fiscal 1993, U.S. Trade Policy Updates .... 11 vegetables, poultry meat, and pet foods. exports of bulk commodities decreased Market Updates. 13 $600 million from the previous year. U.S. agricultural shipments to the top U.S. Agricultural Exports: Double-digit declines for cotton and ten markets recorded mixed results in By Commodity Type ... 15 com and a large drop in tobacco fiscal 1993 when compared to the By Commodity Group .. 16 shipments more than offset export previous year. Exports to Japan, By Region . 17 increases for wheat and soybeans. Canada, Taiwan and Hong Kong all Foreign Exchange Rates . . 18 U.S. Agricultural Export Summaries 11 October-September and Latest Month Comparisons fy '92 ■ fy '93 Product Summary -Year-to-date- -Latest month- Wood products 1/ Wood products 1/ Horticultural prods. Horticultural prods. Soybeans & products Soybeans & products Livestock products Livestock products Feed grains Feed grains Wheat & flour Wheat & flour Fish & Seafoods 1/ Fish & Seafoods 1/ Cotton Cotton Tobacco Tobacco Rice Rice 0 2 4 6 8 10 0 100 200 300 400 500 600 700 Billion dollars Million dollars Top Ten Markets Summary -Year-to-date- -Latest month- Japan Japan EC EC Canada Canada Mexico Mexico S. Korea S. Korea Taiwan Taiwan FSU FSU Hong Kong Hong Kong Egypt Egypt Philippines Philippines 0 2 4 6 8 10 Billion dollars Million dollars Note: Percentages are computed as the change from a year ago. 1/ Not included in agricultural totals. Trade Highlights - 2 November 1993 TEID/FAS (202 ) 720-1294 Consumer Food Highlights Exports of consumer foods totaled $1.3 billion in markets in the EC, Mexico and many South American countries. September, up seven percent from the same month last year. This brings the export figure to $10.8 billion for the first Poultry meat exports continued double¬ digit gains in September, rising 16 nine months of 1993, an increase of just over seven percent percent from year-earlier levels to $92 from the same period last year. Gains remain broadly million. With year-to-date shipments now totalling $758 million, sales are based across most product groups, with double-digit growth expected to easily exceed a record $1 for snack foods, breakfast foods, prepared/preserved red billion by year's end. With sales to- date up 15 percent at $432 million, meats, poultry meats, dairy products, fresh vegetables and frozen chicken cuts continue to lead the pet foods. category with particularly brisk exports to Hong Kong. Also posting strong gains so far this year are frozen turkey Chilled/frozen red meat shipments year. This group is well on its way to cuts and prepared poultry products. totaled $264 million in September, or a new record sales year in 1993. Sales Sales of the latter to Canada are up 60 five percent lower than year-earlier gains, both quantity and value, are percent to more than $35 million. levels. At $2.3 billion, year-to-date spread across a large assortment of sales were virtually unchanged from the vegetables spurred by strong demand Growing world demand for U.S. same period last year. Exports to growth in Canada, Japan and Mexico. breakfast foods continue with export Japan, the leading market, were nine Accounting for most of the sales sales jumping 24 percent to $23 million percent higher than last year's record¬ increase were onions (up 37 percent at in September. These sales boosted setting pace. Falling prices for $54 million), broccoli (up 31 percent at year-to-date shipments to nearly $200 imported beef in Japan have spurred $53 million), lettuce (up 32 percent at million. While Canada continues as the sales. With respect to pork, U.S. $115 million) and asparagus (up 15 largest market, most sales growth so shippers were the only foreign suppliers percent at $61 million). far this year is to the EC and Japan. to achieve increase sales to Japan Kellogg's breakfast foods perform during the first half of 1993, due to September's exports of processed fruits particularly well in these markets, led attractive pricing and a plentiful supply and vegetables totaled $150 million. At by cereals to Japan and toaster pastries of high-quality chilled products. U.S. $1.2 billion, year-to-date sales were five to the United Kingdom. red meat sales remained weaker to the percent ahead of last year's level. other top four markets. Rising exports of processed vegetables Tree nut exports fell 14 percent to $91 continued to drive most of the growth, million in September, with higher prices Fresh fruit exports totaled $150 million with canned products accounting for contributing to significantly reduced in September. At $1.3 billion, year-to- $416 million or 56 percent of these sales in important European markets date sales were running two percent sales. Tomato paste, sweet com and such as Spain and Italy. So far this behind last year's level. This is due to mixed preparations (including sauces) year, total sales are down two percent reduced apple exports (down 12 percent are the major items. At $205 million, to $578 million. While almond exports at $188 million) with supplies on world frozen vegetable shipments are up five are up four percent to $410 million, markets still plentiful, and lower prices percent with french fries and sweet com exports of most other nuts are down; for oranges and grapefruit. While the accounting for most of the increase. At walnuts are down 49 percent to $30 quantity of citrus exports was up five $118 million, dried vegetable sales million and pecans are down 12 percent percent over last year, total sales were recorded a modest four percent increase to $32 million. running two percent behind at $490 due to higher shipments of onions and million so far this year. On the bright soups. side, sweet cherry sales posted a record Exports of dairy products grew 12 percent to $82 million in September. $110 million, up $6 million on a 19 In September, exports of wine and beer Compared to the first nine months of percent decline in quantity, largely due totaled $34 million. This raises year-to- 1992, 1993 sales are up 14 percent to to the profitable opportunity for new date sales to $293 million, up six $625 million boosted by strong U.S. sales to Japan. Grapes, avocados and percent from last year's level. Beer government-assisted sales of dry milk melons also posted noticeable sales shipments accounted for 55 percent of and butter. Other important dairy gains over last year. total sales and virtually all of the product exports posting gains so far this growth over last year. Extensive year include infant preparations (up 99 September's exports of fresh vegetables overseas marketing conducted by the percent to $85 million), cheese (up 15 totaled $55 million. This raises year-to- major U.S. breweries has spurred sales percent to $40 million), and fluid milk date sales to $762 million, an increase growth. Japan remains the top market, and cream (up 37 percent $26 million). of 15 percent over the same period last but sales are also growing to secondary TEID/FAS (202) 720-1294 November 1993 Trade Highlights - 3 s d o o F r e m u s n o C . S . U d es 3. tn 99 co 1 es o lri 2/ t ea 9 Smp 19 m r Co fro o e g fer han tsmb he c ee t s kt a rep ed aS ut M mp h o g c u e eo ar vr s h e Fiy t ntag r ce pa er u P on e Ta ot J N Trade Highlights - 4 November 1993 TE1D/FAS (202) 720-1294 Product Spotlight: Chilled or Frozen Beef and Veal Strong export promotion efforts in major overseas markets continue. First, as the U.S.’ share of world trade expanded, so too did world and partial trade liberalization in major import markets is trade, which will likely continue to paying off big for the U.S. beef industry. The value of total grow. International trade in beef and veal grew about 4 percent each year U.S. chilled/frozen beef and veal exports has doubled in the over the last half decade; growth of 3-4 past six years, reaching a record $2 billion in fiscal 1993. percent annually is expected through the end of the decade. With the role of overseas sales expected to remain vital to the industry's health, the continued involvement and close Second, the recent conclusion of a U.S.- South Korean trade agreement locks in cooperation of the U.S. government and the U.S. Meat a commitment to increasing volumes of Export Federation in market development and trade policy minimum beef imports by South Korea for the next several years, and U.S. issues should drive U.S. exports to new highs in the years firms are well poised to compete in this ahead. In fact, if present trends continue, U.S. exports market. could double again, reaching $4 billion by 2000. Third, the passage of NAFTA will allow for tariffs on chilled/ frozen U.S. beef to Mexico to immediately fall back After several years of declining per The U.S. industry is finding it can to zero. This should enable exports of capita beef consumption in the U.S., the compete in the booming $9.6 billion the U.S. industry, which on a level U.S. beef industry is increasingly world beef export market partly due to playing field is quite competitive with seizing opportunities for growth in its large herds, abundant and cheap Mexican producers, to grow to new foreign markets. Rising foreign feed, sophisticated slaughter operations, record highs as the Mexican economy demand for U.S. meats is the result of and a product which can be grows. rising incomes, agreements with Japan differentiated as grain-fed beef. The and South Korea to reduce trade U.S.' share in world trade of Fourth, in Canada, the U.S.' second barriers, lower tariffs with Mexico and chilled/frozen beef and veal rose to 12.3 largest market, the U.S. should benefit Canada, and the desire of East Asian percent in 1992, up from 6.3 percent in from continued strong demand for beef consumers to add more protein to their 1987. Most of the U.S.' gain came at coupled with the anticipated extension diets in the form of meats. Fueled by the expense of smaller export of a favorable trade policy regime in these trends, U.S. chilled/frozen beef competitors, rather than from the share 1994. A large increase in beef imports and veal exports reached 417,800 tons held by the EC and Australia, which are from Australia and New Zealand in 1993, worth a record $2 billion. first and second in chilled/frozen beef partially displaced U.S. beef exports in This significantly improves upon export exports. fiscal 1993. Canada imposed a tariff levels in 1988, when the U.S. sold rate quota on non-U.S. boneless beef 210,500 tons, worth $956 million. Multiple indicators suggest the U.S.' imports for the period May 1 to success in expanding beef exports will December 31, 1993. Non-U.S. imports exceeding 48,000 tons face a 25 percent U.S. and Australian Exports Gain Share of ad valorem tariff for the rest of 1993. This policy is anticipated to continue Global Beef and Veal Trade for 1994, leading to a rise in U.S. beef exports to Canada. Percent (by volume) Finally, the newer markets of Taiwan U.S. and Hong Kong hold out significant EC (Less promise in the medium-term, particularly for sales to the hotel, Infra -Trade) restaurant and institutional trade (HRI). Australia The U.S. and Australia Battle in Japan Rest of World Fueled by the final reduction stipulated in the 1988 U.S.-Japan Beef and Citrus Agreement, U.S. chilled/frozen beef exports to Japan hit an all-time high of TEID/FAS (202) 720-1294 November 1993 Trade Highlights 5 - Beef and Veal $1.2 billion on shipments of 228,000 consumers with taste-testing tables in One final note: although the position of MT in fiscal 1993. This is up from department stores and "Aussie beef" U.S. beef is being challenged by intense $738 million in fiscal 1988. Extensive advertising on television. According to competition and recession, FAS analysts promotional efforts led by the U.S. the USMEF, Australian promotion nevertheless expect U.S. beef sales to Meat Export Federation (USMEF) at expenditures for 1993 are estimated Japan to rise next year and to continue every step of the opening of the above $20 million. expanding at a healthy clip over the Japanese market helped pave the way next few years. for private U.S. firms. Much of this The competition between the two has promotional effort was financed by been most intense for share in the Exports to Mexico Likely to Surge USDA's Export Promotion Program chilled beef market (as distinct from the (MPP) and its predecessor, the Targeted frozen market). Chilled beef is The Mexican market offers tremendous Export Assistance Program (TEA). primarily distributed to retail outlets, potential for growth of U.S. beef and which are seen as having the greatest veal, particularly under NAFTA. U.S. Historically, imported beef suffered growth potential overall for imported beef and veal shipments to Mexico in from a generally poor image among product. The U.S. steadily gained fiscal 1992 were more than six times Japanese consumers versus domestic ground over 1988-1992, rising from larger by volume than in 1988. Most beef, but educational efforts by USMEF 17.3 to almost 30 percent of imported of the increase took place between has begun to reverse this. As evidence, chilled beef. But in 1993 thus far, fiscal 1990 to 1992, as Mexican imports U.S. beef usage among USMEF's target Australia has made greater in-roads into of U.S. chilled/frozen beef grew from supermarkets jumped from 15 percent the Japanese market than the U.S. approximately $72 to $218 million. in 1988 to 37 percent in 1991. And Japanese chilled beef imports from U.S. beefs share of total purchases by Australia were up 41 percent in the first However, this sharp growth was the six largest supermarket chains half of 1993, compared with the same interrupted by the imposition of new increased $154 million in 1991 alone. period in 1992, according to data import barriers in November 1992, as compiled from the Japanese Ministry of Mexico clamped down on imported Yet in the shadow of this success story Finance. Japanese chilled beef imports beef by raising import tariffs from zero is the less well-known story of how from the U.S. were up 20 percent to 20-25 percent. This had an Australia and the U.S. are now battling during the same time period. immediate, negative impact on U.S. for an edge in this market. Although exporters. Although U.S. exports as a each country is tied with 48 percent of Most recently, Japan's economic whole fell by 45 percent, one West the value of imported beef sales, slowdown has shifted beef consumption Coast firm contacted by Agricultural Australia is hoping to challenge the from high-grade, chilled grain-fed cuts Trade Highlights reported a slowdown U.S. as the preferred source of grain-fed to less expensive beef. As a result, of 75 percent in its shipments to beef in Japan, according to Madeleine major supermarket chains in Japan have Mexico following the boost in tariffs. Beaumont, market analyst for the discounted imported beef by as much as However, it is doubtful that it would be Australian Meat & Livestock Corp. To 20-50 percent, as consumers seek lower legal for Mexico to erect similar accomplish this, an Australian campaign prices during difficult economic times. obstacles to trade after NAFTA takes has targeted individual Japanese effect on January 1, 1994. As the Mexican economy grows, U.S. Beef and Veal Exports to Top 4 Markets Take Off disposable income among Mexicans will increase, thereby spurring sales of beef, the meat of choice in Mexico. Thus the firm which reported the slowdown, along with the rest of the U.S. beef industry, is now bracing for a strong rebound in Mexican-bound shipments with the implementation of NAFTA. USMEF analysis shows that Mexican beef consumption could increase 25-60 percent by the year 2000. As the number of Mexicans who can afford hamburger and other lower-cost cuts rises, Mexican retailers will increasingly rely on U.S. product to fill demand, given constraints to domestic Trade Highlights - 6 November 1993 TEID/FAS (202) 720-1294 Beef and Veal production. Moreover, as the size of the way for a resumption of a normal may lack the technical and management the middle class — which now numbers volume of tender offers in the second expertise to handle, store and 30 million -- expands, there will be a half of the year. The agreement also merchandise the product properly and commensurate jump in demand for established a framework for overall effectively. Consequently, the bulk of premium cuts. The HRI and restaurant Korean minimum beef imports to grow the USMEF's activities in Korea shore trade will be a major conduit for such at 7 percent per annum through 1995, up the understanding of the Korean product; they currently account for 50 and for the market to be fully opened trade, as well as develop a positive and 14 percent, respectively, of by 1997. image for U.S. beef. The USMEF Mexican sales of U.S. high quality beef. conducts boxed beef seminars and Korea is basically following the safety and inspection seminars geared To be successful, U.S. beef exporters liberalization procedures adopted by towards the trade, and at the retail level, should focus on building distribution Japan. This includes setting minimum creates point-of-sale displays, translates channels in Mexico, establishing direct beef import levels, requiring foreign technical material and performs in-store links with end-users, and promoting firms to engage a Korean agent, and promotions. quality differences vis-a-vis local channeling the vast majority of beef product through promotion. Firms imports through a government Imported beef in Korea, the majority of should also be aware that Mexicans purchasing board at the same time as a which has been grass-fed beef from have a preference for leaner beef, which simultaneous buy-sell (SBS) system is Australia, is most commonly sold in may potentially open the door to instituted. The SBS system lets the specialty shops, followed by physically Australian or EC beef. (This is more foreign seller and the domestic buyer segregated sections of wet markets and true in Central and Southern Mexico; (or industry association) deal directly supermarkets. However, the U.S.' Mexicans in the North have already with one another. This allows for a strength is in high quality cuts such as been introduced to grain-fed beef.) more efficient, market-driven boxed beef, which are primarily Indeed, due to increased competition, transaction (although mark-up rates are channeled to the HRI sector. Beef is the U.S.' share of the Mexican market set by the agreement rather than by the purchased on average twice a week, dropped from 90 percent of imports in market). The SBS portion of the usually by the housewife. Seventy 1988 to 73 percent in 1992. However, market began small but will be percent of Korean consumers buy their after January 1, the U.S. will enjoy a gradually expanded during the course of meat from butcher shops. price edge of over other third-party the agreement to include non-tourist competitors who will continue to face hotels and restaurants, meat processors Australia is the top import competitor, the present import tariffs of 20-25 and many supermarkets. holding about 45 percent by value of percent. the Korean import market in calendar Consequently, the interest of U.S. firms 1992 versus the U.S. share of 49 Exports to South Korea To Benefit in the Korean market is getting percent. Australia's main advantage is from July Agreement stronger. One U.S. firm which its production of lower-priced, grass-fed describes itself as a small regional and grain-fed product, and its ability to South Korea, the fourth-largest U.S. packer of about $200 million in total satisfy the traditional Korean handling beef export market in volume terms, is annual sales recently participated in a preference for carcass product. This certain to boost its purchases of U.S. USMEF trade show geared to the preference, however, has been changing beef in coming years. U.S. exporters are Korean market, and found the trade recently. already increasingly penetrating the show extremely helpful in making market, aided by the U.S. government's contacts with the HRI trade in-country. To summarize, the U.S. beef industry and other suppliers' success in Such contacts will become increasingly has achieved great success in global negotiating the continued opening of important as the SBS system widens, trade. With the focus on foreign sales Korea's beef market. To illustrate, the affording U.S. firms increased expected to remain vital to U.S. firms, U.S. shipped $9 million worth of opportunities to supply product the stepped-up involvement of the U.S. chilled/frozen beef and veal to Korea in information that focuses on U.S. beefs government and cooperator groups on fiscal 1988; in 1989, the U.S. exported taste advantages over competitor's access issues and matters that affect $72 million and recorded $215 million lower-priced beef. international trade will also continue. in sales in fiscal 1992. As barriers are dismantled and markets The USMEF has also been tackling one become increasingly prosperous, the Lack of government tenders in the of the greatest hurdles to increased sales U.S. beef industry should see its export imported beef market caused imports to — the lack of information by both sides. fortunes improve. drop sharply in the first half of 1993. U.S. firms often don't know their This decline accounted for the $48 Korean counterparts when they have For more information, contact Diane million fall earlier this year in U.S. beef dealt only with Government auctions. Dolinsky at (202) 720-6821. exports to Korea. However, And Korean firms may lack knowledge negotiations concluded in July cleared about U.S. beef production methods, or TEID/FAS (202) 720-1294 November 1993 Trade Highlights - 7 Country Spotlight: Japan Japan continued as the top U.S. $584 million in wheat, a record $372 U.S. consumer food sales to Japan are agricultural export market in 1992 with million in tobacco, and $329 million in dominated by the record $1.8 billion of a record $8.4 billion in sales, cotton. In the first three quarters of this fresh/chilled/frozen red meats in 1992. representing one-fifth of total U.S. year, bulk shipments are down 6.5 The door to red meat exports was agricultural shipments. This year, percent compared to the same time opened by the 1988 Japan Beef and despite a recession, sales may be period last year. Citrus Agreement. While the door was headed for another record high as opened to the Japanese red meat market Japan is also the second largest continued gains in high-value products by the trade agreement, extensive intermediate product market with 1992 offset lower bulk commodity shipments. marketing efforts by the U.S. Meat shipments reaching $978 million. Export Federation, supported by funds Intermediate shipments were led by a The growing importance of high-value from the Market Promotion Program record $336 million in feed and products to Japan this year is a (MPP), were critical to the success of fodders, $286 million in hide and skins, continuation of a 20-year trend. In U.S. red meat in Japan. Chilled grain- a record $55 million in planting seeds 1970, 82 percent of U.S. shipments to fed U.S. beef appeals to premium and $36 million in sugars, sweeteners, Japan were bulk products, while Japanese beef consumers, who are and beverage bases. Hides and skins intermediate high-value products primarily young and affluent. continue a five year decline as the represented 14 percent, and consumer- According to a recent supermarket taste Asian leather industry relocates to other oriented high-value products were only survey, U.S beef (known as Kansas countries. 5 percent of agricultural sales. By beef) is considered to have the same 1992, bulk's share of the export pie fell taste and quality as the top quality Consumer Foods Reach Record to 46 percent, while intermediate domestic Japanese beef that is called for $3.6 Billion in 1992 products accounted for 12 percent, and in traditional Japanese beef dishes. consumer-oriented products rose to 42 Even as Japanese consumers tighten Sales of consumer-oriented foods percent. This shift reflects the effects reached a record $3.6 billion in 1992, their belts on luxury purchases, red of long term economic growth, more than doubling sales in 1987. meat sales continue to be a bright spot demographic changes, and successful Demographic changes, the high income in 1993. So far this year, U.S. sales are trade liberalization efforts which opened of Japanese consumers ($19,000 in 9 percent greater than 1992's record Japan to more U.S. consumer foods. purchasing power equivalent), a setting pace. Lower prices, from a fall stronger yen (making U.S. products in beef tariffs to 50 percent and a Despite the declining bulk commodity cheaper to Japanese consumers), trade weaker U.S. dollar, are contributing to share of total sales, Japan remains the liberalization, shifts in Japanese the strong performance. largest cash market for U.S. bulk consumer tastes and preferences, and products. 1992 shipments reached $3.9 the current economic slow down affect Mixed Picture for Horticultural billion, and were led by $1.7 billion of the short and long term prospects for Products coarse grains, $874 million of soybeans. U.S. consumer food sales. More than $1 billion of horticultural products were shipped in 1992. However, consumption trends and Consumer-Oriented Products Account for Rising demographic shifts present a mixed Share of U.S. Agricultural Exports to Japan future of new opportunities and new challenges for U.S. exporters. $ Million 10,000 In 1992, $410 million of fresh fruit was shipped to Japan - a 4 percent drop 8,000 from the record $427 million of 1991. 6,000 This decline has continued. So far this year fruit exports are 5 percent less than 4,000 in 1992. Fruit exporters, especially grapefruit growers report a soft market 2,000 despite falling prices. Lower fruit exports are reflecting a decade long 0 71 73 75 77 79 '81 '83 '85 '87 '89 '91 '93e decline in per capita fruit consumption Calendar Year in Japan. Trade Highlights 8 November 1993 TEID/FAS (202) 720-1294 -