The impact of the 2012 drought  – which continues into 2013 – can’t be minimized. An estimated 80% of U.S. agricultural land was affected, according to USDA reports. Corn production  dipped nearly 13% below the 2011-12 crop year and was the smallest since 2003-04 with the lowest yields since 1995-96. Soybean production was down 2.5% with yields down 6%.
A shortage of livestock feed  and the high cost of what was available contributed to herd culling and reduced product availability.
With that dismal scenario as a backdrop, the international markets carried their weight in 2012 in terms of returning value to the red meat production chain. With statistics in for the first 11 months of the year, pork exports continue to exceed 2011’s record highs for both volume and value. And although beef exports are down 11% in volume, the value of those products is at an all-time high.
A Closer Look: U.S. Beef Exports Dip Slightly 
As we continue to explore new market niches and expand the spectrum of U.S. red meat products sold internationally, it’s gratifying to see the per-head export values for American beef and pork at record highs: $56.12/head for pork and $214.64 for beef.
So with 2012’s drought and sluggish global economic results as a backdrop, what is the outlook for 2013?
Entering into any new year, USMEF must evaluate not only market conditions in the U.S., but economic, industry and political factors in each of our major international markets . In subsequent installments, I will discuss some of the challenges and question marks that could affect 2013’s export outlook. With the information we have at hand, here is our current viewpoint:
2013 U.S. pork export forecast: With one month missing from last year’s totals, we project pork exports for 2012 to reach 2.27 million metric tons (mt), or 5 billion lbs.) valued at $6.35 billion – both new records. For 2013, we forecast volume and value of pork exports to increase 5%, reaching 2.39 million mt (5.27 billion lbs.) valued at $6.6 billion.
2013 U.S. beef export forecast: With November’s data in hand, USMEF projects beef exports for 2012 to reach 1.13 million mt (2.49 billion lbs.) valued at $5.5 billion, setting a new value record. For 2013, we forecast exports of 1.24 million mt (2.73 billion lbs.) valued at $6.2 billion – increases of more than 9% in volume and 13% in value over 2012 and setting new records for both.
The Top Five Opportunities For 2013
There are a multitude of factors that go into an annual export projection. Here are what I would consider the top five markets of opportunity for this year:
1. Increased beef access to Japan: Japan’s Ministry of Health, Labor & Welfare (MHLW) is in the final stages of approving expanded access for U.S. beef  – from the current 20-month cutoff to 30 months. An announcement could come as early as the end of this month. While the specific logistical details on resolving access issues must be addressed, this single change, expected to be finalized in the first half of 2013, will provide a major boost to U.S. beef exports.
In 2000, U.S. exports to Japan reached 524,224 mt (1.16 billion lbs.) valued at $1.77 billion – accounting for 43% by volume and 50% of the value of all U.S. beef exports that year. At the same time, the U.S. was supplying 53% of Japan’s beef imports . Interestingly, the majority of the lost volume of U.S. beef sales to Japan wasn’t picked up by other beef-exporting nations selling primarily grass-fed beef. Thus, the void in the Japan market (2012 imports from all suppliers will be roughly 575,000 mt compared to 857,715 mt in 2000) is an opportunity for the U.S. to regain lost sales to the highest margin market in the world.
2. China/Hong Kong: Even without access to mainland China , U.S. beef sales to this region (including Vietnam) have seen steady growth and are expected to rise in the future. While the global beef market  stalled in 2012, exports to this region were up about 20% to nearly 500,000 mt and this doesn’t include the growing volumes of water buffalo from India to Vietnam.
We can’t talk about China without talking about pork. China is both the world’s largest producer and consumer of pork, and over the past few years it has increasingly turned to international suppliers to fill plates at home.
In 2012, China/Hong Kong pork imports remained close to the 2011 record levels, even in the face of an increase in Chinese pork production. Through November the region imported 1.5 million mt of pork and variety meats, down just 4% from 2012. The U.S. accounts for roughly one-third of the region’s pork imports. China’s rebound in 2012 pork production was no doubt inspired by record-high pork prices (and profitability) in 2011 and China’s increasingly large-scale hog producers likely continued to make money in 2012, with large total hog inventory numbers going into 2013.
USMEF projects solid export volumes to China again in 2013, although price trends – particularly after the Chinese New Year in February – will be a key indicator.
3. Mexico: Already the No. 1 volume market for U.S. pork, Mexico shows no sign of losing its appetite for U.S. hams, picnics, Boston butts, trimmings and variety meat. The growth of American pork exports to Mexico far exceeded last year’s industry trend. Through 11 months of 2012, Mexico purchased 550,408 mt (1.2 billion lbs.) of U.S. pork valued at $1.03 billion – increases of 15% and 11%, respectively, over 2011 and on a pace to set new records. That trend is expected to continue in 2013 as Mexican consumers look for more high-quality, affordable protein to feed a booming population and a growing middle class. And since per-capita pork consumption in Mexico is only about 25 lbs./year compared to 47 lbs. in the U.S., there is great growth potential.
The outlook for beef exports to Mexico is more reserved due to high prices that are an issue in this cost-sensitive market. Mexico remains the No. 1 volume destination for U.S. beef exports, but growth will be hard to come by as market conditions keep prices high and product scarce, including Mexico’s domestic beef supply .
4. South Korea: The Korean market was sluggish for all red meat imports in 2012, as the combination of an economic downturn and a brisk rebound in Korean domestic livestock herds after the 2011 foot-and-mouth (FMD) disease outbreak created challenging conditions.
BEEF Daily Blog: America’s Beloved Beef Celebrated In South Korea 
Korea’s domestic beef  and pork production are expected to stabilize in 2013, and year two of the Korea-U.S. free trade agreement will bring additional tariff reductions that will enhance opportunities for exports. Even with the challenging conditions of 2012, Korea remained the No. 4 market for U.S. beef exports when measured by value (No. 5 in volume), and the No. 5 pork market. The U.S. also gained market share, accounting for 33% of Korea’s pork imports.
5. Taiwan: This island nation has been a valued trading partner for both the U.S. beef and pork industries, but controversy surrounding the use of the growth promotant ractopamine interrupted exports for much of 2012. With Taiwan’s adoption of the Codex Alimentarius maximum residue limit  (MRL) for ractopamine in imported as well as domestic beef, exports of U.S. beef are returning to the point where they were in 2011 when Taiwan was the No. 6 market for U.S. beef.
The controversy hasn’t been resolved for pork, however. While Taiwan ’s adoption of the MRL for beef was a very positive step, similar action for pork is still needed. Since Taiwan’s pork sector is, by far, the biggest and most influential sector of agriculture in that country and pork producers have more political clout, resolution of the issue will be more complex.
There are many more opportunities for growth of U.S. red meat exports in the coming year – pork to Australia, both beef and pork to Central and South America, beef to the Middle East, as well as the potential for expanding access for U.S. lamb to key markets currently closed, including Japan.
In the next installment, we will discuss the top 5 obstacles to maintaining or growing U.S. red meat exports in the coming year.