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CoBank: Profit through exports

Meat consumption in the United States is likely to hit an all-time high this year.  Producers like that as demand can increase profit.  But what about the world that wants our beef pork and poultry?  Should producers grow for that market as well?

Will Sawyer is the lead economist for animal protein at CoBank and contributed to a recently published report entitled, Protein Passport, designed to look at the value of exports for beef, pork, and poultry and address the concerns some producers harbor about growing too dependent on the export market.

“As we speak to industry groups around the country, we do hear that fear of ‘what are we getting ourselves into as we increase our exports as a percentage of production,” Sawyer said citing specific worries of increased volatility and lower profit margins. “What we’ve seen in comparable markets is that they are a little more volatile, but prices have risen significantly over the last 10 to 15 years. So, for producers, we think the value proposition makes sense and future initiative should be seen as opportunities, not threats.”

Sawyer used Australia as a prime example of how to successfully implement an export-oriented approach. According to him, Australia exports 70 percent of its production and has become one of the most competitive protein industries in the world. Sawyer says the US is well positioned to take advantage of a similar situation – experiencing a taste of that this past year in 2018 when beef export demand grew 10 percent, pork by 5 percent and poultry between 2-3 percent. Sawyer believes this is indicative of even greater opportunity waiting to be tapped into.

Overall…Sawyer says the best economic path is to produce for the world market to maximize revenue and profit.“The key I think about this year versus what we’ve seen over the last five or six, is per capita, meat consumption in the US is going to hit an all-time high. It’s going to return to where we were prior to the Great Recession,” he explained. “So, when we think about going forward, we need to think about growing supply and finding a profitable home for it and in our opinion – that’s going to be through trade.”

(This interview with Will Sawyer was provided by Ron Hays of the Radio Oklahoma Ag Network)

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