1. US Pork Exports Becca Hendricks AVP International Marketing, National Pork Board

2. US Share of World Exports Source: USDA FAS US is top exporter of pork in the world US is top exporter of pork in the world EU is 2 nd EU is 2 nd

3. Exports Share of Production 23.4% of U.S. Pork (muscle cuts only) 23.4% of U.S. Pork (muscle cuts only) 27% of U.S. Pork and Pork Variety Meats 27% of U.S. Pork and Pork Variety Meats Source: USDA *includes sausage casings

4. CI #2: Enhanced Demand Importance of Free Trade

5. 2012 Year-end Pork Exports – A New Record $6.3 Billion – ↑3.5% 4.987 Billion lbs – Up slightly Source: USDA statistics compiled by USMEF

6. 1 st Quarter 2013 Exports $1.488 Billion – ↓11% from Q1 2012 1.164 Billion pounds – ↓12% from Q1 2012 $55/head in value Source: USDA statistics compiled by USMEF 2013

7. Partners in International Trade National Pork Board National Pork Producers Council US Meat Export Federation State Pork Associations

8. Serving Trade Partners Consistent, high-quality, nutrient-dense meats Unparalleled food safety history Reliable, versatile supply Market development & education support Transparent, responsible production methods Producer/packer/government commitment & collaboration

9. Trade Access Laurie Hueneke Director of International Trade Policy, National Pork Producers Council

10. US Pork Industry Trade Policy National Pork Producers Council = advocacy arm of the US pork industry which sets domestic and international policy Use science-based trade & impact to producers bottom line/economics to guide policy setting decision-making – Work with subject-matter experts, other industry groups Many countries erect artificial or unscientific barriers to trade called non-tariff trade barriers or ‘sanitary and phytosanitary’ (SPS) barriers – Examples: PRRS restrictions, trichinae mitigation – Violates rules agreed upon as part of the global trade agreement

11. Asia-Pacific region free trade agreement (FTA) negotiation 11 countries—Australia, Brunei, Canada, Chile, Mexico, New Zealand, Peru, Singapore, USA, Vietnam Japan’s (almost official) joining TPP is a game changer Most important FTA the US has ever negotiated thus far Goal: Removal of all tariff and non-tariff barriers Major payout is resolving sanitary and phytosanitary (SPS) barriers Aim to reach an agreement by fall 2013, but that will be difficult as many issues still remain outstanding Trans-Pacific Partnership (TPP)

12. Transatlantic Trade & Investment Partnership (TTIP) Free trade negotiations between the US & 27-member European Union Negotiations likely to start summer 2013 NPPC leading lobbying effort Major barriers to US pork exports – Tariff rate quota (TRQ) smaller than Uruguay Round minimum access – Ban on ractopamine – Trichinae mitigation requirements – Prohibition on pathogen reduction treatments (PRTs) – Plant approvals

13. Russia Implemented complete ban on imports of US pork, beef and turkey Feb. 11 No science-based reason In December, Russia announced it would require pork imports from the US to show documentation that the pork does not contain ractopamine residues (Paylean) NPPC working w/ US government to reopen market for ractopamine-free product China Issued a statement asking for third party verification that US pork exports contain no ractopamine residues Already had ban on ractopamine Lots of volatility and uncertainty Russia & China

14. Trichinae Countries with Trichinae Restrictions: Albania Argentina (unofficial) Barbados Belarus Brazil (unofficial) Chile Croatia Colombia (lifted soon) Dominica European Union India Kazakhstan Macedonia Peru Russia Serbia (no export certificate) Singapore South Africa Ukraine Venezuela

15. Impact of Trichinae Restrictions on US Pork Exports Dermot Hayes Iowa State University, Trade Consultant to NPB and NPPC

16. Overview Costs associated with trichinae certification for both chilled and frozen pork Chilled and frozen pork markets, shelf life issues and consumer preferences How chilled and frozen pork is processed and sold Economic costs of certification Country specific data

17. Certifying Frozen Pork Example: A customer asks to buy frozen picnics that are trichinae certified The USDA will provide cert if it can make sure that time/temp conditions met, this requires monitoring A third party will handle freezing and paperwork for $0.06-0.10 per pound A special label is then used to identify the boxes that contain the certified picnics This is added to the capital costs associated with the ownership of the meat

18. Testing Fresh or Chilled Pork Example: A customer asks for chilled picnics with trichinae cert Plant identifies a group of animals for testing so guaranteed enough picnics The animals are slaughtered and processed separately from other animals Sample taken from diaphragm of each of the animals and sent for testing The lab combines a group of 100 samples and searches for trichinae larvae, if the sample is free then the carcasses are certified Lab cost is $0.01 per pound of carcass. Paperwork and segregation costs equal $0.02 to $0.04 per pound depending on the facility, (larger facilities have higher costs), industry average is $0.044 per pound Picnics sent to the customer and the rest of carcass sold to customers that do not require a cert

19. Markets for Chilled and Frozen Pork In general, importing retail consumers prefer chilled pork and processors prefer frozen pork Because of limited shelf life, chilled pork can only be sold to countries where shipping time and customs clearance make it feasible Countries that currently import chilled US pork include Japan, Mexico, Canada, Taiwan and South Korea In theory, US can export chilled pork to the EU, Russia, China and all of Central and South America

20. Markets Where Frozen Requirement is the Barrier Kazakhstan, Singapore, South Africa, Ukraine EU and Canada can provide pork to these markets without additional $0.10 per pound cost Importers prefer spot purchases from these sources rather than the paperwork and capital costs and time associated with the US system, this further erodes the US costs advantage

21. Singapore Partner CountryUnit Quantity% Share % Change 2012/2011 201020112012201020112012 WorldT72,36165,99472,055100.00 9.18 BrazilT26,96222,56526,99337.2634.1937.4619.63 NetherlandsT8,0888,99110,93211.1813.6215.1721.60 AustraliaT12,89811,2989,14717.8217.1212.69- 19.04 United StatesT8,0557,4617,37811.1311.3110.24- 1.11 FranceT3,5553,7713,0804.915.714.27- 18.33 DenmarkT2,2222,0912,5223.073.173.5020.59 SpainT3961,2942,4660.551.963.4290.65 CanadaT4,5512,0432,2816.293.103.1711.65 GermanyT1,1991,1321,9421.661.712.6971.57

22. South Africa Partner CountryUnit Quantity% Share % Change 2012/2011 201020112012201020112012 WorldT26,10532,07932,951100.00 2.72 GermanyT11,08315,89613,30442.4549.5540.38- 16.30 CanadaT5,8167,8318,13522.2824.4124.693.89 SpainT1,9852,6774,7607.608.3514.4477.79 FranceT3,0132,1921,99911.546.836.07- 8.82 United KingdomT50231,2680.190.073.855413.05 DenmarkT8892789763.410.872.96251.77 BelgiumT1,4231,0378035.453.232.44- 22.54 IrelandT1,5411,0637975.903.312.42- 24.96 NetherlandsT0753120.000.230.95316.62 HungaryT997603000.382.370.91- 60.56 United StatesT25802440.100.250.74204.58

23. Markets Where Chilled Requirement is the Barrier Argentina (unofficial), Brazil (unofficial), Chile, Cuba, Colombia (may soon be removed), Dominica, EU, Peru, Russia Suppose that picnics account for one tenth of the carcass value then the effective barrier is $0.044 per pound multiplied by 10! Need to request the certificate before the animal is slaughtered also imposes a cost because spot sales are prohibited (the largest US pork exporter to Mexico does not slaughter any animals), elimination of spot sales is worth about $0.10 per pound Total cost of this system effectively keeps us out of the chilled market in the countries listed above US has a competitive advantage in many of these countries as is evidenced by market share in frozen product

24. Colombia Partner CountryUnit Quantity% Share % Change 2012/2011 201020112012201020112012 WorldT8,08216,35426,818100.00 63.98 United StatesT3,2117,77913,61139.7347.5650.7574.98 ChileT2,2503,8796,76527.8323.7225.2274.41 CanadaT2,6224,6976,41732.4428.7223.9336.62 ChinaT00250.00 0.090.00

25. Summary Trichinae certification reduces our market share for frozen pork in all countries Trichinae testing reduces market share or eliminates US from competition in potential chilled pork markets This report puts a value on this problem Solutions: – Elimination of the import requirement based on USDA designation and scientific evidence – Bring US pork industry practices and regulatory infrastructure in line with OIE standards

26. Global Outreach-Trichinae USDA, NPPC and NPB developed position statement which was used to provide the US/global position Outreach conducted to Central and South American country pork producer groups, reached out to their veterinary authorities Results of OIE Code Commission: – Text for combination of audits and surveillance but neither separately – Consistent with an EU perspective Adopted in May but agreed to remain amendable OIE agreed to continue to work on a system for national trichinae negligible risk status

27. Next Steps Harmonizing OIE standards and US commercial industry's status will maintain trichinae standing Pork organizations will continue to interact with OIE standard setting on behalf of US pork producers – More work to be done to gain negligible risk status – Open new opportunities for chilled U.S. pork – Full benefits won’t be realized for years…laying groundwork

28. Your Role to Ensure Continued Safe Food, Animal Health and Market Access Trichinae prevention SOPs will also protect herd health! – Work with your veterinarian – Participate in PQA Plus and implement GPPs – Strict biosecurity – Strict rodent control

29. Questions?