Meat&Poultry - January 2012 - 21

especially beef, the meat and poultry industry will be looking abroad for the most robust growth. A study from the Food and Agriculture Organization of the United Nations states that the global population will reach 9 billion by 2050. Animal protein is expected to rise accordingly by 73 percent. Along with advances in population, growth in middle incomes will mean more people with the fi nancial resources to purchase more proteins of higher quality. Beef exports are forecasted to grow 21 percent in 2011, and this should be roughly the same in 2012. Several factors have made US beef more attractive to foreign markets, including a weaker US dollar, declines in cattle inventories and production, and more foreign countries buying US beef. Pork exports are also forecasted to have flat to minimal growth in 2012. Any growth in pork exports will not be as high compared to 2011, which saw the export value of pork poised to surpass $5 billion for the fi rst time in history. However, China could change the export environment if the country continues to import US pork at the same rate as 2011. Exports to Asia buoyed Smithfield Inc.’s Pork segment in the second quarter of fiscal 2012. The company

recorded sales of $3.3 billion, up 10 percent, primarily due to higher average unit selling prices and volumes in its Pork segment. Fresh pork operating margins for the second quarter were 7 percent, or $14 per head, but declined slightly from the prior year as a 22 percent increase in live hog market prices more than offset a 14 percent improvement in the US Dept. of Agriculture pork cutout. Above normalized margins reflected surging export demand and steady domestic supplies. Sales tonnage and head processed increased 3 percent and 2 percent, respectively. Broiler and turkey industries are optimistic about exports in 2012. Global consumption of turkey and chicken will advance slightly, depending on importers’ willingness to pay premium prices for chickens and turkeys. In exports, international competition will be fierce, and trade bans and tariffs could thwart industry’s ambitions to enter more global markets. Animal diseases always will cast a long shadow over industry, and natural disasters will be an ever-present threat to trade. Recovery has been slow for some countries already roiled by earthquakes and other natural disasters with Japan being one example.

Political unrest across the globe has been a constant concern for governments and business. US businesses have felt the effects of turbulence abroad. For example, in the fi rst quarter of fiscal 2012 ended Aug. 31, Cargill reported $236 million in earnings from continuing operations – a 66 percent decrease from $693 million in the same period a year ago. Cargill attributed the company’s results in large part to the persistent and high degree of uncertainty in the global economic environment, which injected turbulence into commodity markets and limited trading opportunities, according to Greg Page, Cargill chairman and CEO.

Political unrest across the globe has been a constant concern for governments and business.
A slow domestic recovery, uncertainty abroad and rising costs for just about everything could make 2012 a pivotal year for profitability in the US meat and poultry industries. ■
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Meat&Poultry - January 2012

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