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ABSTRACT

  1. Top of page
  2. ABSTRACT
  3. 1. INTRODUCTION
  4. 2. TRADE AGREEMENTS AND ANIMAL PRODUCT TRADE
  5. 3. SPECIAL ISSUE OVERVIEW
  6. ACKNOWLEDGMENTS
  7. REFERENCES
  8. Biographies

In this special issue of Agribusiness: An International Journal we focus on emerging issues in global animal product trade, the theme of a conference hosted by the Economic Research Service (ERS), U.S. Department of Agriculture on September 27–28, 2012 in Washington, DC, in partnership with Farm Foundation, NFP, the Larry Combest Endowed Chair for Agricultural Competitiveness at Texas Tech University, and the S-1043 Regional Research Group. The articles in this special issue highlight a range of factors affecting animal product trade such as import standards and regulations, import bans, preferential trade agreements, price transmission and volatility, exchange rate volatility, and demand growth in emerging markets.

1. INTRODUCTION

  1. Top of page
  2. ABSTRACT
  3. 1. INTRODUCTION
  4. 2. TRADE AGREEMENTS AND ANIMAL PRODUCT TRADE
  5. 3. SPECIAL ISSUE OVERVIEW
  6. ACKNOWLEDGMENTS
  7. REFERENCES
  8. Biographies

In this special issue of Agribusiness: An International Journal we focus on emerging issues in global animal product trade, the theme of a conference hosted by the Economic Research Service (ERS), U.S. Department of Agriculture on Sept. 27–28, 2012 in Washington, DC, in partnership with Farm Foundation, NFP, the Larry Combest Endowed Chair for Agricultural Competitiveness at Texas Tech University, and the S-1043 Regional Research Group.

Animal product trade is an important component of U.S. agricultural trade. For instance, total agricultural exports in the United States increased from $53 billion in 2002 to $141 billion by 2012 (an increase of 166%), and animal products exports (excluding fish) consistently accounted for about 20% of total exports each year. Table 1 shows U.S. exports, imports, and the trade balance (2002–2012) for three key animal product sectors: livestock and meats, poultry and products, and dairy and products.1 During this period, U.S. animal product exports significantly increased: livestock and meats increased by 121% from $8.3 to $18.5 billion, poultry and products by 203% from $2.1 to $6.3 billion, and dairy and products by 442% from $0.9 to $5.1 billion. Import growth has not been as substantial, resulting in a rising positive trade balance for each sector. The growth in dairy exports has been so rapid since 2004 that the United States has gone from being a net dairy importer to a net exporter with a current positive trade balance of over $2 billion. Consequently, these sectors have become more dependent on global factors such as income growth in emerging markets, import regulations and standards in destination markets, macroeconomic shocks in foreign countries, exchange rate and global price volatility, trade barriers, and liberalization policy.

Table 1. U.S. Animal Product Exports, Imports, and Trade Balance: 2002-2012
Note
  1. Livestock & Meats, Poultry & Products, and Dairy & Products are as defined by the defined Foreign Agricultural Service. See http://www.fas.usda.gov/gats/default.aspx for more information.

  2. Source: U.S. Department of Agriculture, Foreign Agricultural Service, Global Agricultural Trade System.

 Exports Imports Trade Balance 
 LivestockPoultry &Dairy &LivestockPoultry &Dairy &LivestockPoultry &Dairy &
Year& meatsproductsproducts& meatsproductsproducts& meatsproductsproducts
 $ Millions
20028,3732,0659456,9383151,7711,4351,749−826
20039,0902,2879976,6063112,0132,4841,976−1,016
20046,5852,5771,4537,8374102,399−1,2522,168−947
20057,6953,1391,6298,4183932,676−7232,746−1,047
20069,0372,9341,8328,4244042,6256132,529−793
200710,5044,0942,9789,0514762,8421,4533,618136
200813,0315,0533,7538,4964593,0754,5354,594678
200911,5034,7752,2357,2643902,4724,2394,386−237
201014,3874,8063,6898,1475012,4816,2404,3051,209
201118,1255,6294,7798,9055402,8049,2205,0891,976
201218,5346,2545,1249,8456263,0638,6885,6282,061
%Δ 2002-12121%203%442%42%98%73%   

2. TRADE AGREEMENTS AND ANIMAL PRODUCT TRADE

  1. Top of page
  2. ABSTRACT
  3. 1. INTRODUCTION
  4. 2. TRADE AGREEMENTS AND ANIMAL PRODUCT TRADE
  5. 3. SPECIAL ISSUE OVERVIEW
  6. ACKNOWLEDGMENTS
  7. REFERENCES
  8. Biographies

Although the overall purpose of the ERS conference was to highlight the importance of animal products to agricultural trade, the focus was on current and pending trade agreements and their effect on livestock and meat trade. The rise in meat, poultry, and dairy trade has not been exclusive to the United States. In fact, these sectors have been steadily increasing across the globe, primarily driven by rising world income and population growth, as well as productivity growth in animal production. Enduring issues with animal product trade are the impact of free trade agreements and the influence of technical barriers to trade (TBTs) and sanitary and phytosanitary (SPS) barriers. Although the main objective of trade agreements is to reduce barriers such as tariffs, a range of nontariff barriers often associated with SPS or TBT barriers on animal products can influence trade negotiations and the capacity for effective free trade agreements.

Preferential and multilateral trade agreements are important to expanding U.S. meat, poultry, and dairy exports. The passage of the U.S. bilateral trade agreements (FTAs) with South Korea, Colombia, and Panama (as well as other agreements) represented substantial and immediate growth opportunities for U.S. animal products. For instance, the Korea FTA led to immediate duty-free access for milk powders, whey, and cheese (within TRQ bounds) and quota expansions overtime, a phase-out of a 40% tariff on U.S. beef, and duty-free access for U.S. pork. In addition to market access, the Korea FTA also establishes a committee to harmonize regulatory standards and guidelines. Similarly, the Panama FTA also addresses sanitary and technical standards issues, particularly for U.S. meat and poultry.2

The Trans-Pacific Partnership (TPP), a pending agreement considered the most significant trade initiative of the century, provides clear examples of the importance of animal products to negotiations.3 For instance, a sticking point with the agreement is the elimination of high dairy tariffs and the dairy supply management program in Canada (Fergusson, Cooper, Jurenas, & Williams, 2012). Also, there have been long-standing concerns between the United States and Japan as it relates to meat trade (e.g., the 2003 ban on U.S. beef due to Bovine spongiform encephalopathy). In fact, the beef sector was singled out as one of the more sensitive sectors in which exclusion would be sought during the TPP negotiations (Cooper & Manyin, 2013).

3. SPECIAL ISSUE OVERVIEW

  1. Top of page
  2. ABSTRACT
  3. 1. INTRODUCTION
  4. 2. TRADE AGREEMENTS AND ANIMAL PRODUCT TRADE
  5. 3. SPECIAL ISSUE OVERVIEW
  6. ACKNOWLEDGMENTS
  7. REFERENCES
  8. Biographies

The articles in this special issue highlight a range of factors affecting animal product trade such as import standards and regulations, import bans, preferential trade agreements, price transmission and volatility, exchange rate volatility, and demand growth in emerging markets. Taha and Hahn investigate how the 2003 outbreak of BSE in the United States affected the demand for U.S. meat exports. Vector-autoregressive methods were used in their study to model exports of U.S. beef, beef offal, pork, and pork offal and asses the structural change in export demand following the BSE outbreak. The authors highlight how disease outbreaks can have long-term effects on the overall structure of meat trade. In the article: “A Taste for Safer Beef? How Consumers’ Food Safety Perceptions Influence Their Willingness to Pay for Country-of-Origin Labeled Beef,” the authors address an important policy issue in the United States, Country of Origin Labeling (COOL). Although past studies have shown that COOL can affect food demand, the underlying motivation for such behavior is not well understood. The authors use experimental methods to assess how consumer preferences differ for imported and domestic beef products and found that willingness to pay for country-of-origin labeled beef is associated perceptions about risk and food safety.

One article in this special issue examines the differential effects of food safety regulations on animal products trade with a focus on crustacean products. The authors focus on import regulations and the use of banned substances in trade. Although chloramphenicol is a banned substance, it has been used as a veterinary drug to treat farm animal disease and is even used in human treatment. The authors investigate the impact of advancing chloramphenicol analytical standards on crustacean imports in the EU15, Japan, and the North America. The paper extends the work of others by exploring the differential effect of standards on individual products.

Studies have shown that volatile exchange rates can have a significant effect on bilateral trade flows. However, this effect could differ across individual sectors given the biological, marketing, and economic factors specific to a commodity. The article: “The Impact of Exchange Rate Volatility on World Broiler Trade” addresses how exchange rate volatility affects cross-partner broiler trade and shows that while long-run exchange rate volatility has a negative and significant effect on trade, the effect is small when compared to the effects of population, regionalization, and sharing a common border.

Mergers and consolidations resulting in increased industry concentration have always created concerns for agricultural sectors. Acosta, Valdés, and Foster's article on vertical price transmission in milk markets addresses whether small dairy producers are efficiently integrated into the marketing chain. The authors examine the degree of vertical price transmission between wholesalers and small dairy producers to assess the efficiency level of the dairy market in Panama. The authors note that ensuring an adequate transmission of price signals from wholesalers to producers is fundamental to agricultural growth and productivity, and consequently, to poverty reduction. Expanding on this theme, a second article addresses the spatial transmission of milk prices from global to the domestic market in Panama. The authors provide a deeper understanding of the magnitude, speed, and symmetry to which global milk prices are being transmitted to domestic prices at the farm gate. The motivation for both studies is that milk has become one of the more volatile agricultural commodities in international markets.

Jones and Blayney examine changes in dairy product import demand in South Korea. The authors address how the implementation of the trade agreement between South Korea and the United States affected South Korean dairy trade. The authors found that the tariff reductions associated with the agreement opened the South Korean dairy market primarily by reducing dairy import prices.

Lastly, Chen and Abler conduct a meta-analysis of consumer demand studies that focused on animal products in the BRIIC countries (Brazil, Russia, India, Indonesia, and China). The BRIIC countries accounted for more than one-fourth of global GDP (purchasing power parity) in 2010, and are projected to have high rates of economic growth during the coming decade. Results of their study indicated that future demand is likely to become more price-responsive but less income-responsive, particularly in China and India where per capita incomes are projected to grow rapidly.

ACKNOWLEDGMENTS

  1. Top of page
  2. ABSTRACT
  3. 1. INTRODUCTION
  4. 2. TRADE AGREEMENTS AND ANIMAL PRODUCT TRADE
  5. 3. SPECIAL ISSUE OVERVIEW
  6. ACKNOWLEDGMENTS
  7. REFERENCES
  8. Biographies

We are grateful to the participants of the conference, Emerging Issues in Global Animal Product Trade, held at the Economic Research Service (ERS), September 2012 in Washington, DC. Conference funding was provided by the ERS Cooperative agreement 58 3000 2 0064 (with the Farm Foundation, NFP) and the Larry Combest Endowed Chair for Agricultural Competitiveness at Texas Tech University.

  1. 1

    Total agricultural trade, livestock and meats, poultry and products, and dairy and products are as defined by the U.S. Department of Agriculture, Foreign Agricultural Service. See http://www.fas.usda.gov/gats/default.aspx for more information.

  2. 2

    For more information on the U.S. trade agreements with South Korea and Panama see: http://www.fas.usda.gov/info/factsheets/Korea/us-koreatafactsheets.asp and http://www.fas.usda.gov/itp/us-Panama.asp.

  3. 3

    TPP is a pending trade agreement between Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico New Zealand, Peru, Singapore, United States, and Vietnam.

REFERENCES

  1. Top of page
  2. ABSTRACT
  3. 1. INTRODUCTION
  4. 2. TRADE AGREEMENTS AND ANIMAL PRODUCT TRADE
  5. 3. SPECIAL ISSUE OVERVIEW
  6. ACKNOWLEDGMENTS
  7. REFERENCES
  8. Biographies
  • Cooper, W.H., & Manyin, M.E. (2012). Japan joins the trans-Pacific partnership: What are the implications? Report number R42676. Congressional Research Service, Washington, DC, August 24, 2012.
  • Fergusson, I.F., Cooper, W.H., Jurenas, R., & Williams, B.R. (2013). The trans-Pacific partnership negotiations and issues for congress. Report number R42694. Congressional Research Service, Washington, DC, January 24, 2013.

Biographies

  1. Top of page
  2. ABSTRACT
  3. 1. INTRODUCTION
  4. 2. TRADE AGREEMENTS AND ANIMAL PRODUCT TRADE
  5. 3. SPECIAL ISSUE OVERVIEW
  6. ACKNOWLEDGMENTS
  7. REFERENCES
  8. Biographies
  • Andrew Muhammad is Chief of the International Demand and Trade Branch, Market and Trade Economics Division, Economic Research Service, U.S. Department of Agriculture. He received a Ph.D. in Food and Resource Economics in 2000 from the University of Florida, an M.S. in Agricultural Economics from the University of Missouri in 1996, and a B.S. in Agribusiness from Southern University in 1993. His work focuses on global food demand, agricultural trade and developing countries, trade policy, and import demand analysis.

  • Keithly Jones is a senior research economist with the Economic Research Service in the Market and Trade Economics Division. He is a principal in the agency's research examining import and export demand for meat, poultry, fish, and dairy products. His research focuses on various factors, including exchange rates, quality, inputs, animal disease, cloning, country of origin labeling (COOL), and trade policy. His responsibilities include analysis that provides a perspective of the economic situation and policy environment for meat and livestock trade.

  • Amy Hagerman is an economist with the Animal and Plant Health Inspection Service in Fort Collins, CO and was previously with the Animal Products and Cost of Production Branch in the Market and Trade Economics Division, Economic Research Service where she focused on animal disease economics and livestock trade policy issues.