current trends in north american supply chain management: agriculture the case of beef and pork...
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Current Trends in North American Supply Chain
Management: Agriculture
The Case of Beef and Pork
Flynn AdcockCenter for North American Studies
Dept. of Agricultural EconomicsTexas A&M University
Prepared for the Conference North America WorksKansas City, MO, October 13, 2005 CNASCNAS
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 CNAS
Trends in North American Agricultural Trade
Implementation of CUSTA (‘89) and NAFTA (‘94) Decreased Border Restrictions and Encouraged Integration
U.S.-Canada and U.S.-Mexico Trade Began to Grow Significantly following CUSTA/NAFTA
Canada-Mexico Trade Growing but Restricted by Geography and Large U.S. Market
30% of U.S. Ag Exports Now Go to N.A. (12.5% in 1989)
35% of U.S. Ag Imports Now Come from N.A. (24% in 1989)
U.S. Agricultural Exports
Source: Foreign Agricultural Trade of the United States, Calendar Year, USDA/ERS
$40.0 $39.5 $39.4$43.2 $43.0
$46.1
$56.2$60.4
$57.2
$51.8$48.4
$51.2$53.6 $53.1
$59.5$61.3
1989 1994 1999 2004$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
Billion Dollars
ROW NAFTA
U.S. Agricultural Imports
Source: Foreign Agricultural Trade of the United States, Calendar Year, USDA/ERS
$21.9 $22.9 $22.9$24.8 $25.2
$27.0$30.2
$33.5$36.1 $36.9 $37.7 $39.0 $39.4
$41.9
$47.3
$54.0
1989 1994 1999 2004$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
Billion Dollars
ROW NAFTA
The Evolving North American Beef and Pork Supply Chain
CUSTA and NAFTA Have Led to Greater N.A. Trade in Beef, Pork and Live Animals
Greater Integration of Other Resources (Capital, Technology, Grains) Has Also Occurred
A North American Beef and Pork Complex Has Resulted
The BSE Outbreaks Changed the Nature of N.A. Beef Supply Chain
N.A. Pork Supply Chain Has Stabilized CNAS
U.S. Beef and Pork Exports, 1989 - 2004
19891994
19992004
0
200
400
600
800
1,0001,000 Metric Tons
Beef Pork
Source: PS&D Online, www.fas.usda.gov/psd
CNAS
U.S. Beef Exports, 2003 & 2004
Source: U.S. Trade Internet System, www.fas.usda.gov/ustrade
Canada7.7%
Mexico23.3%
Korea25.1%
Japan36.1%
Other7.8%
Canada8.6%
Mexico78.5%
Other12.9%
2003 Total: 820.6 TMT 2004 Total: 135.6 TMT
U.S. Pork Exports, 2003 & 2004
Japan51.0%
Mexico17.7%
Canada9.6% Korea
5.1%Taiwan4.0%
Other12.5%
Japan45.3%
Mexico24.1%
Canada9.2% Taiwan
4.9%
China3.5%
Russia3.4%
Korea3.2%
Other6.5%
Source: U.S. Trade Internet System, www.fas.usda.gov/ustrade
2003 Total: 494.5 TMT 2004 Total: 651.1 TMT
U.S. Imports of Beef and Pork
226234 216186 208 209 194 184 191 217
266321 325
367401376
639699 710 729 719 715
642 641
734
823880
945987 987
898
1,104
1989 1994 1999 20040
200
400
600
800
1,000
1,2001,000 Metric Tons
Beef Pork
Source: U.S. Trade Internet System, www.fas.usda.gov/ustrade
U.S. Beef Imports, 2002 & 2004
Source: U.S. Trade Internet System, www.fas.usda.gov/ustrade
Australia38.3%
Canada38.7%
New Zeal20.3%
C. Amer2.3%
Other0.4%
Australia33.7%
Canada32.1%
New Zeal19.2%
Uruguay11.6%
C.l Amer2.8%
Other0.5%
2002 Total: 987.0 TMT 2004 Total: 1,104.2 TMT
CNAS
U.S. Cattle Imports, 1989 - 2004
Source: Foreign Agricultural Trade of the United States, Calendar Year, USDA/ERS
1989 1994 1999 20040
500
1,000
1,500
2,000
Thousand Head
Canada Mexico
Composition of U.S. Beef Importsby Source, 2004
Source: USDA/FAS. Note 3 refers to beef entering under the TRQ, Other Frozen Boneless indidicates over-quota beef
347.1
24.1
206.4
14.6 21.824.2
298.0
5.6 5.4 7.90.1 0.7 0.0
99.0
0.01.1
32.6
0.5 9.2 0.1
Australia Canada New Zealand Uruguay C. Amer0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
Thousand Metric Tons
Frozen Boneless, Note 3
Fresh/Chill Boneless, Note 3
Other Frozen Boneless
Other
Canadian Beef Exports
Source: Agriculture and Food Canada, USDA/FAS
189
247 29
2 3 29
4 01
4 85
4 45 4 8
9
2 96
4 54
1995 1996 1997 1998 1999 2000 2001 2002 2003 20040
100
200
300
400
500
600
1,000 MT
U.S. Japan Korea Mexico Others
Mexico Beef Imports
Source: FAS/USDA attache reports
30
60
110
150
180
220 24
0
280
225
205
1995 1996 1997 1998 1999 2000 2001 2002 2003 20040
50
100
150
200
250
300
350
1,000 MT
U.S. Canada Others
Monthly U.S. Corn Exports to Canada,January 01 - July 05
Jan 01
Jul 01
Jan 02
Jul 02
Jan 03
Jul 03
Jan 04
Jul 04
Jan 05
0.0
100.0
200.0
300.0
400.0
500.0
600.0Thousand Metric Tons
Source: U.S. Trade Internet System, www.fas.usda.gov/ustrade
BSE in CANADA
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 Metric 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, 1989
$284 Million, 873,550 Head of Beef Cattle$176,000, 70 Metric Tons of Beef
$72 Million, 124,937 Head of Beef Cattle$76 Million, 29,606 Metric Tons of Beef
$11 Million, 23,650 Head of Beef Cattle$119 Million, 31,406 Metric Tons of Beef
$377 Million, 584,732 Head of Beef Cattle$185 Million, 87,106 Metric Tons of Beef
CNAS
The North American Beef Supply Chain: Comments
BSE Reduced and Altered the 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 Doubtful CNAS
Intra-NAFTA and ROW Pork Trade
Source: USDA/FAS and CanFax
225.6
600.2
747.1
507.0
1,590.4
1,769.3
1993 2002 20040.0
500.0
1,000.0
1,500.0
2,000.0
Thousand Metric Tons
NAFTA ROW
U.S. Swine Imports from Canada1989 - 2004
Source: Foreign Agricultural Trade of the United States, Calendar Year, USDA/ERS
1.1 0.9 1.10.7 0.8 0.9
1.7
2.83.2
4.1 4.1 4.4
5.35.7
7.4
8.5
1989 1994 1999 20040.0
2.0
4.0
6.0
8.0
10.0
Million Head
Feeder Pigs Slaughter Hogs
U.S. Pork Imports, 2003 & 2004
Canada87.2%
Denmark11.4% Other
1.4%
Canada85.1%
Denmark12.4%
Other2.5%
Source: U.S. Trade Internet System, www.fas.usda.gov/ustrade
2003 Total: 400.9 TMT 2004 Total: 376.3 TMT
CNAS
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
1995 1996 1997 1998 1999 2000 2001 2002 2003 20040
200
400
600
800
1000
1,000 MT
U.S. Japan Mexico Korea Other
Mexico Pork Imports
Source: FAS/USDA attache reports
49 54
63
91
114
166 18
1
235
269
257
1995 1996 1997 1998 1999 2000 2001 2002 2003 20040
50
100
150
200
250
300
1,000 MT
U.S. Canada Other
Integration in the North American Swine and Pork Industry, 2004
$25 Million, 138,800 Head of Swine$302.6 Million, 156,900 Metric Tons of Pork
$1.06 Million, 5,900 Head of Swine$182 Million, 60,200 Metric Tons of Pork
$530 Million, 8.5 Million Head of Swine$761 Million, 320,300 Metric Tons of Pork
$57 Million, 60,300 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
The North American Pork Supply Chain: Comments
Decrease in Canadian Grain Transportation Subsidies Helped to Spur Local 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 CNAS
Potential Disruptions to N.A. Beef and Pork Supply Chain
Diseases Such as BSE, FMD Have Already Caused Disruptions
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 CNAS
Integration in the North American Cattle and Beef Industry, 2004
$543 Million, 1.4 Million Head of Beef Cattle$33 Million, 5,900 Metric Tons of Beef
$213 Million, 87,700 Metric Tons of Beef
$671,000, 1,400 Head of Beef Cattle$371,000, 106,500 Metric Tons of Beef
$2.4 Million, 14,000 Head of Beef Cattle$12 Million, 56,000 Metric Tons of Beef
$55,000, 135 Head of Beef Cattle$1.2 Billion, 354,000 Metric Tons of Beef
Integration in the North American Cattle and Beef Industry, 2003
$470 Million, 1.2 Million Head of Beef Cattle$34 Million, 6,700 Metric Tons of Beef
$70 Million, 20,000 Metric Tons of Beef
$23 Million, 24,000 Head of Beef Cattle$606 Million, 193,000 Metric Tons of Beef
$30 Million, 68,000 Head of Beef Cattle$321 Million, 81,000 Metric Tons of Beef
$396 Million, 512,000 Head of Beef Cattle$850 Million, 256,000 Metric Tons of Beef
CNAS
Alberta Direct Sale Steer Prices,Weekly Average, Jan 01 - Sep 05
Source: Alberta Agriculture, Food and Rural Development, www.agric.gov.ab.ca2001 are monthly averages, source CANFAX, calculated by LMIC
JanFeb
Mar
AprM
ayJun
JulAug
SepO
ctNov
Dec
$20
$40
$60
$80
$100
$120CN$/CWT
2001 2002 2003 2004 2005
SummaryNorth American Beef and Pork Industries
are Integrated - Almost One Supply ChainMarkets React Immediately to ‘News,’ But
in U.S. has 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 CNAS
ImplicationsImplications Degree of Trade Dependence Likely Continue
Though Product Mix May Change Disruptions will Continue to Occur, But N.A.
Supply Chain Too Entrenched to Change Much Maintaining Consumer Confidence is Crucial on
Animal Health/Food Safety Issues Protectionist Response to Increase Trade to
Continue Support for VCOOL Growing & Animal
Identification May Be Necessary to Export Canada & Mexico May Seek Marketing
Alternatives CNAS
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 Attache Reports, Foreign Agricultural Service, USDA, www.fas.usda.gov.
CNAS
Center for North American StudiesCenter for North American Studies
Flynn Adcock or Parr RossonFlynn Adcock or Parr Rosson
Ph: 979-845-8694 or 845-3070Ph: 979-845-8694 or 845-3070
E-mail: [email protected] or [email protected]: [email protected] or [email protected]
“Informed Decisions for Global Change”
CNAS