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The Integration of the North American Meat Supply Chain Presentation for the FAMPS Track Organized Symposium: Impacts of North American Economic Integration of U.S. Agricultural Products. Flynn Adcock and Parr Rosson Center for North American Studies Dept. of Agricultural Economics - PowerPoint PPT Presentation
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The Integration of the North American Meat Supply Chain
Presentation for theFAMPS Track Organized Symposium:Impacts of North American Economic
Integration of U.S. Agricultural Products
Flynn Adcock and Parr RossonCenter for North American Studies
Dept. of Agricultural EconomicsTexas A&M University
Prepared for the AAEA Annual MeetingsLong Beach, CA, July 25, 2006
Overview
Trends in North American Agricultural Trade
The Growing Integration of the North American Beef and Pork Industries
Factors Impacting the North American Beef and Pork Supply Chains
Summary and Implications
Trends in North American Agricultural Trade
U.S.-Canada and U.S.-Mexico Trade Began to Grow Significantly following CUSTA (‘89) and NAFTA (‘94)
Canada-Mexico Trade Growing but Restricted by Distance and Large U.S. Market
32% ($19.9 Million) of U.S. Ag Exports Now Go to N.A. - 12.5% in 1989 ($5 Million)
35% ($20.6 Million) of U.S. Ag Imports Now Come from N.A. - 24% in 1989 ($5.2 Million)
The Evolving North American Beef and Pork Supply Chain
CUSTA and NAFTA Have Led to Greater N.A. Trade in Beef, Pork, Poultry and Live Animals
Greater Integration of Other Resources (Capital, Technology, Grains) Has Also Occurred
A North American Beef and Pork Complex Has Resulted
BSE Changed the Nature of N.A. Beef Supply Chain
N.A. Pork Supply Chain Presently Stable
U.S. Imports of Live Cattle fromCanada and Mexico, 1989 - June 2006
Source: U.S. Trade Intenet System, www.fas.usda.gov/ustrade
1989 1994 2000 20050.0
500.0
1000.0
1500.0
2000.0 Cattle Mexico
U.S. Beef Exports
5 82
5 98
6 76 6 98
7 85 8 1
3
7 56 8 0
1
8 21
1 35 2 0
2
1995 1997 1999 2001 2003 20050
200
400
600
800
1000
1,000 MT (Retail Weight)
Mexico Canada Japan Korea Taiwan Others
Source: U.S. Trade Internet System, www.fas.usda.gov/ustrade
U.S. Beef Imports
Source: U.S. Trade Internet System, www.fas.usda.gov/ustrade
6 42
6 41 7 3
3 8 23 8 8
1 9 45 9 8
7
9 87
8 98
1 ,10
4
1 ,07
2
1995 1997 1999 2001 2003 20050
200
400
600
800
1,000
1,200
1,400
1,000 MT (Retail Weight)
Canada Australia New Zealand Uruguay Others
Composition of U.S. Beef Imports,by Source, 2005
Source: FAS/USDA attache reports and U.S. Trade Internet System, www.fas.usda.gov/ustrade
3 28 .
5
2 0.6
4 .9
5 .2 2 2
.5
1 8.0
2 77 .
6
1 92 .
4
1 4.7
7 .2
0 .3
0 .1
0 .0
1 39 .
6
1 .01 4
.0
1 .2
0 .9 1 3
.8
0 .0
Canada Australia New Zealand Uruguay Central America0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
1,000 MT
Fresh/Chilled Boneless, Note 3
Frozen Boneless, Note 3
Other Frozen Boneless
Other
Canadian Beef Exports
Source: Agriculture and Food Canada, USDA/FAS
1 89
2 47
2 92 3 2
9
4 01
4 85
4 45
4 89
2 96
4 54 4 8
7
1995 1997 1999 2001 2003 20050
100
200
300
400
500
600
1,000 MT, Retail Weight
U.S. Mexico Japan Korea Others
Mexico Beef Imports
Source: FAS/USDA attache reports, U.S. Trade Internet System, and Agrculture and Food Canada
30
60
110
150
180
220 24
0
280
225
205
210
1995 1997 1999 2001 2003 20050
50
100
150
200
250
300
350
1,000 MT
U.S. Canada Others
The North American Beef Supply Chain: Comments
BSE Reduced and Altered N.A. Beef Industry Integration, Especially Among Canada and the U.S.
While Unable to Export Fed Steers to the U.S., Canada Increased Feeding, Slaughter Capacity, and Beef Exports to U.S.
U.S. Firms (Tyson/IBP, Cargill) Have Increased Investment in Canadian Processing Plants
Will Resumption of Canadian Cattle Exports to U.S. Spark Return to 2002 Scenario – Maybe but Too Early to Tell
Will Latest BSE Cases Disrupt Trade Again?
U.S. Swine Imports from Canada
Source: U.S. Trade Intenet System, www.fas.usda.gov/ustrade
1.1
0.9 1.1
0.7 0.8
0.9
1.7
2.8 3.
2
4.1
4.1 4.4
5.3 5.
7
7.4
8.5
8.2
1989 1994 2000 20050.0
2.0
4.0
6.0
8.0
10.0
Million Head
Feeder Pigs Slaughter Hogs
U.S. Pork Imports
1 94
1 84
1 91
3 21
3 25
2 17
2 66
3 67 4 0
1
3 76
3 59
1995 1997 1999 2001 2003 20050
100
200
300
400
500
1,000 MT (Retail Weight)
Canada EU-25 Other
Source: U.S. Trade Internet System, www.fas.usda.gov/ustrade
Canadian Pork Exports
Source: Agriculture and Food Canada, USDA/FAS
309 331 36
8 4 23 4 9
3
6 18 6 8
1 7 48 7 8
8
7 78 8 0
6
1995 1997 1999 2001 2003 20050
200
400
600
800
1000
1,000 MT (Retail Weight)
U.S. Japan Mexico Korea Other
U.S. Pork Exports
2 28 2 6
8
2 86 3 5
6 3 86
3 93
4 75
4 67 4 9
5
6 51
8 04
1995 1997 1999 2001 2003 20050
200
400
600
800
1000
1,000 MT (Retail Weight)
Mexico Canada Japan Other
Source: U.S. Trade Internet System, www.fas.usda.gov/ustrade
Mexico Pork Imports
Source: FAS/USDA attache reports and U.S. Trade Internet System, www.fas.usda.gov/ustrade
49 54 63
91
114
166 18
1
235 26
9
257
371
1995 1997 1999 2001 2003 20050
100
200
300
400
500
1,000 MT
U.S. Canada Other
The North American Pork Supply Chain: Comments
Decrease in Canadian Grain Transportation Subsidies Helped Spur Canadian Animal Feeding
Canadian Hog Slaughter Capacity Has Decreased, and While U.S. Capacity Has Decreased, U.S. Hog Production Has Decreased Even More
U.S. Hog Producers Have Gone from Many Small, Farrow to Finish Operators to Fewer, More Specialized Operators
Canadian Pig Production More Efficient than U.S., and Exchange Rate Favored Importing Canadian Hogs from ’96 – ‘02
Potential Disruptions to N.A.Beef and Pork Supply Chain
Diseases Such as BSE, FMD, and Hog Cholera Could Disrupt Trade
Domestic Legislation, such as MCOOL and the Bioterrorism Act, Have Potential to Cause Disruptions
Anti-Dumping/Countervailing Duty Cases Filed by All Three N.A. Countries Against Each Other Strain Relations and Could Disrupt Trade Flows
Fluctuations in Exchange Rates Often Result in Temporary Changes in Advantages for Either U.S. or Canada/Mexico – and This Will Continue
Integration in the North American Cattle and Beef Industry, 2002
$301 Million, 816,000 Head of Beef Cattle$23 Million, 6,000 Metric Tons of Beef
$283 Million, 76,000 Met. Tons of Beef
$75 Million, 105,000 Head of Beef Cattle$592 Million, 206,000 Metric Tons of Beef
$50 Million, 134,000 Head of Beef Cattle$218 Million, 67,000 Metric Tons of Beef
$1.1 Billion, 1.7 Million Head of Beef Cattle$1.1 Billion, 392,000 Metric Tons of Beef
Integration in the North American Cattle and Beef Industry, 2005
$515 Million, 1,256,000 Head of Beef Cattle$47 Million, 7,600 Metric Tons of Beef
$139 Million, 52,000 Metric Tons of Beef
<$1 Million, 1,000 Head of Beef Cattle$550 Million, 146,000 Metric Tons of Beef
$5 Million, 19,000 Head of Beef Cattle$132 Million, 67,000 Metric Tons of Beef
$526 Million, 562 Thousand Head of Beef Cattle$1.2 Billion, 367,000 Metric Tons of Beef
Integration in the North American Swine and Pork Industry, 2005
$17 Million, 125,000 Head of Swine$281 Million, 158,900 Metric Tons of Pork
$478 Thousand, 3,700 Head of Swine$269 Million, 80,000 Metric Tons of Pork
$598 Million, 8.2 Million Head of Swine$745 Million, 315,000 Metric Tons of Pork
$51 Million, 60,000 Metric Tons of Pork
Integration in the North American Swine and Pork Industry, 1989
$7.9 Million, 78,112 Head of Swine$48.4 Million, 19,275 Metric Tons of Pork
$101,000, 285 Head of Swine$8.4 Million, 2,610 Metric Tons of Pork
$101 Million, 1.1 Million Head of Swine$310 Million, 186,000 Metric Tons of Pork
SummaryNorth American Beef and Pork Industries
are Integrated - Almost One Supply ChainMarkets React Immediately to ‘News,’ But
U.S. Recovered Quickly While Pain Lingered in Canada
Unique Market Conditions Likely to ChangeU.S. Increased Cattle Imports from Mexico
and Beef Imports from Canada and Uruguay to Help Meet Demand
U.S. Pork Exports Have Gained As Beef & Poultry Exports Have Declined
ImplicationsDegree of Trade Dependence Likely Continue
Though Product Mix May ChangeDisruptions will Continue to Occur, But N.A. Supply
Chain Too Entrenched to Change DrasticallyMaintaining Consumer Confidence is Crucial for
Animal Health/Food Safety IssuesProtectionist Response to Increased Trade to
ContinueSupport for VCOOL Growing & Animal
Identification May Be Requirement to ExportCanada & Mexico May Seek Marketing Alternatives
Primary References Haley, Mildred. “U.S.-Canadian Hog Trade: Market
Integration at Work.” Amber Waves. Economic Research Service, USDA, Volume 3, Issue 1, February 2005.
Rosson, C. Parr, III and Flynn J. Adcock. “Food Chain Disruptions and Trade: The Importance of North American Market Integration.” Choices. 2nd Quarter, 2005, 20|2. On-line journal of the American Agricultural Economics Association, available at http://www.choicesmagazine.org, July 2005.
U.S. Trade Internet System and Attaché Reports, Foreign Agricultural Service, USDA, www.fas.usda.gov.
Flynn Adcock or Parr RossonFlynn Adcock or Parr Rosson
Ph: 979-845-8694 or 845-3070Ph: 979-845-8694 or 845-3070
E-mail: fjadcock@tamu.edu or prosson@tamu.eduE-mail: fjadcock@tamu.edu or prosson@tamu.edu
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