USMEF economist stresses importance of trade with Japan at USDA Outlook Forum


High Plains/Midwest Ag Journal

Mar 7, 2019


The importance of Japan as a trading partner for U.S. agriculture was the focus of a recent panel discussion at the USDA Agricultural Outlook Forum in Arlington, Virginia. U.S. Meat Export Federation Economist Erin Borror explained that Japan is the leading value destination for both U.S. beef and U.S. pork, with 2018 exports expected to reach $2.1 billion and $1.65 billion, respectively, when year-end data is available. But Borror also cautioned that the competitive terrain in Japan has gotten steeper for U.S. red meat due to Japanís preferential trade agreements with Australia, the European Union, Canada, New Zealand, Mexico and Chile, and this situation will worsen unless the United States secures similar access terms with Japan.


Borror noted that U.S. beef export value per head of fed slaughter averaged a record $320.72 in 2018, up 14 percent year-over-year and shattering the previous high ($300.36) set in 2014. Japan accounts for one-fourth of this total, or $82.75 per head. The ratio is similar for U.S. pork export value, which averaged $51.46 per head slaughtered in 2018. Japan accounted for $13.18, or 26 percent of the total per-head value.


She also explained that beef and pork make up a significant portion of U.S. agricultural exports to Japan. The projected $3.92 billion in combined red meat product exports represent about 30 percent of the $13 billion in total U.S. ag exports to Japan, second only to grains and feeds.


Furthermore, Japanís red meat consumption is likely to expand at a faster rate once the benefits of lower import duties are passed along to consumers. In South Korea, for example, the tariff rate on U.S. beef has dropped by more than half since 2012 under the Korea-U.S. Free Trade Agreement, and U.S. beef enjoys a tariff rate advantage over its competitors. Most pork from the United States and other major suppliers enters Korea at zero duty. Red meat is now more affordable and accessible for Korean consumers who have responded enthusiastically, with per capita consumption setting new records. A similar development in Japan will only benefit the U.S. beef and pork industries if they are on a level playing field with competitors.


Without a U.S.-Japan trade agreement, potential losses for the U.S. meat industry are substantial. On a per-head basis, Borror estimates lost export opportunities for U.S. beef will reach $18.70 by 2023 and $42 by 2028. For pork, the per-head loss is projected to be $4.55 by 2023 and $7.06 by 2028. U.S. exporters are already feeling the effects of tariff disadvantages of 11 percentage points for beef cuts and 6.4 percentage points for beef tongues and skirts. For pork, the most immediate impact is on processed and value-added products, where tariffs are quickly being phased to zero. This is already eroding U.S. market share for important products such as ground seasoned pork. Japanís imports of U.S. ground seasoned pork were valued at $288 million last year.


ďUnless the U.S. and Japan can quickly reach a trade agreement, lost opportunities will mount as Japanese companies seek more value-added, further processed products from suppliers such as the EU and Mexico,Ē Borror explained...