At a value of over $40 billion (10 percent of global agricultural
trade) and a volume of 20 million tons per year, global trade in
meats is big business. Growing populations, rising incomes, and
increased urbanization have all contributed to a boost in demand
for meat. This demand has been supplied, in part, by low-cost meat
from countries with good resources for meat production, such as
abundant feedgrains. But other factors, such as numerous import
tariffs and sanitary rules safeguarding the health of animals and
humans, affect meat trade as well. Yet another dimension to global
meat trade is differences in demand for meat cuts.
Most meat trade is in the form of cuts. One cut, or part, of a
slaughtered animal can be shipped to one place while other parts
are sent elsewhere. Demand for the parts varies considerably, both
within and among countries, depending on consumer tastes, whether
cuts can be substituted for one another, and other factors. In
the U.S., for example, consumers prefer beef steak to beef liver.
Despite the greater abundance of steak meat (a steer yields about
16 times more steak than liver), the U.S. price of steak is much
higher than that of liver. Chicken legs are prized in some countries
but get a low price in others. Chicken legs are 4-5 times as expensive
in Japan as in the U.S., but chicken breasts cost 25-40 percent
less in Japan. The price differences reflect consumers’ willingness
to pay for these cuts.
Some trade seems to reflect these differences in demand, rather
than competitiveness in producing the meat. For example, it is
uncertain whether chicken and hog production costs less in the
U.S. than in China. The large U.S. exports to China do correspond
to demand for different cuts, however. The main U.S. chicken exports
to China are feet, wings, and legs, while the main pork exports
are organs, such as hearts.
The ability to mix and match cuts for different markets offers
meat firms the opportunity to send each part of an animal to the
market that will pay the highest price for it, thereby increasing
the aggregate value of each animal. If lower tariffs or increased
success in meeting sanitary standards allow meat trade among more
countries in the future, trade in cuts is likely to proliferate
as firms find higher valued matches for various cuts.
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