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Why Iowa's relationship with Japan still matters, 60 years after pigs flew | The Spokesman Speaks Podcast, Episode 62

The Spokesman Speaks podcast

Welcome to Episode 62 of The Spokesman Speaks podcast. This episode celebrates the 60th anniversary of the Japan Hog Lift, an act of Iowa kindness that has created a lasting relationship between Iowa and Japan (and one that has played a meaningful role in the United States' strong trade relationship with Japan).

In this episode, we talk with Iowa Farm Bureau President Craig Hill about Iowa's unique, ongoing relationship Japan, and we talk with U.S. Meat Export Federation President and CEO Dan Halstrom about the current demand for U.S. meat in Japan and in other parts of the world.

 

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Narrator: Welcome to the Spokesman Speaks. A podcast for farmers and ag professionals by the Iowa Farm Bureau, bringing you the news, experts, and educational insights that matter most now, here's your host.

Zach Bader: Welcome to our December 14th edition of the Spokesman Speaks podcast. I'm Zach Bader and today's episode celebrates the 60th anniversary of the Japan hog lift, an act of Iowa kindness that helped create a lasting relationship between our state and Japan. And of course, that relationship also means a lot to U.S. agriculture as a whole with Japan becoming such a strong market for U.S. Ag exports. So today we'll talk with Iowa Farm Bureau, president Craig Hill about the importance of Iowa's unique and ongoing relationship with Japan, which is something that he got to see firsthand during a Farm Bureau trip to Japan back in 2016. And then we'll bring on Dan Halstrom, who is the president and CEO of U.S. Meat Export Federation. And we'll talk about how things currently stand with one of America's most important trade partners. We'll start with President Hill Spokesman editor Dirck Steimel takes it from here.

Dirck Steimel: Today, we're visiting with Iowa Farm Bureau, president Craig Hill to discuss the 60th anniversary of the Japan hog lift in late 1960 Iowa farmers and ag leaders arranged to transport 36 breeding hogs along with a hundred thousand bushels of corn to the Japanese province of Yamanashi after its agriculture was devastated by two typhoons. Craig, why was it Japan hog lifts so important. And why does it still resonate today in Japan and in Iowa after six decades?

New Speaker: Well, Dirck the single act of kindness and generosity from compassionate Iowa farmers helped halfway around the world, a desperate population that had been ravaged by natural disaster. It was very meaningful. It was a major impact on our two countries relationship and the beginning of a friendship most specifically in Iowa for Iowa and the Yamanashi prefecture.

Dirck Steimel: What does the hog lifts say about people in agriculture helping one another after weather tragedies or any other tragedies, whether they are in Iowa or in Japan or anywhere else in the world?

President Craig Hill: I believe that people with rural roots farmers, producers, and agriculture from around the world share a common bond. We know that people must eat. We as farmers can't fail, we feel a sense of responsibility despite whatever mother nature may throw at you when something so devastating is two typhoons destroys, years of work farmers know that we need to come together to help. And we do.

Dirck Steimel: So in 2016, Craig, you joined a group of Iowa Farm Bureau leaders to visit Japan and spend a few days in Yamanashi. How were the Farm Bureau leaders received in Japan and particularly in Yamanashi?

President Craig Hill: We were welcomed with open arms, both by government officials there but also the population in general, while we learned while we were there is those 36 breeding animals that were delivered from Iowa's farms had grown to 500 breeding animals and just a few years, but in less than a decade of those 36 had become greater than 500,000 a head of swine in Yamanashi prefecture. And today the vast majority of the pigs and Yamanashi are progeny from Iowa farms. That's a remarkable story.

Dirck Steimel: During the trip. How did the people in Yamanashi commemorate the hog lift? President Craig Hill: Well, we had, you know, an embassy visit in which the U.S. ambassador to Japan, Caroline Kennedy actually visited with U.S. about this event and how the relationships have been built over the years as a result of that. We had a number of conversations with folks that had read or heard about and were reminiscing about that event and what impact it had to their population.

Dirck Steimel: The 1960 hog lift helped spark the first sister state relationship between an American state and a Japanese province or prefecture as they're often called. Why are relations like that so important?

President Craig Hill: Well, it's just an amazing thing that a single act of kindness what it can do to create enduring and lasting relationships between two countries. Our family has hosted numerous. Japanese farmers to our farm. Countless exchanges and delegations have traveled back and forth. Over the many years, the story of the hog lift is shared in books. Seeds of kindness can bear fruit for a lifetime. And it's an incredible story.

Dirck Steimel: Today, Japan is a very important customer for Iora is pork for corn, for beef and other products. Do you think the ties built by the Japan hog lift are partly responsible for that?

President Craig Hill: I believe that to be true Japan over the many years has become either our number one, number two, or number three market for pork and beef and corn as a very strong, reliable market for us. In Japan, there's 126 million folks that have very limited natural resources within that. Country's geography a country, just the size of California. So I think for centuries to come this relationship will bear fruit.

Zach Bader: You know, it's really incredible to think that we started with just 36 Iowa hogs in the Yamanashi prefecture 60 years ago. And now as Craig said, we know that the vast majority of hogs in Yamanashi have a lineage that traces back to Iowa. It's really just incredible. And of course, that's just one example of the ripple effect that can come from a small act of kindness. Another example is the trade relationship that has been built between the U.S. and Japan over time for that, we send it back to Dirck. Who's now with U.S. Meat Export Federation, president and CEO, Dan Halstrom,

Dirck Steimel: Today with Dan Halstrom, president and CEO of the U.S. Meat Export Federation, a native of Cherokee in Northwest Iowa. Dan joined USMEF in 2010, after nearly three decades in the meat industry. Dan we're celebrating the 60th anniversary of the Japan hog lift here in Iowa. It was in late 1960 when farmers and ag leaders arranged for 36 breeding hogs and a hundred thousand bushels of corn to be shipped to Japan, to help that country recover from two terrible typhoons. That generosity helped to build a strong relationship between Japan and the United States. And particularly between Japan and Iowa. Why are those kinds of relationships so valuable as we work to market U.S. meat products around the world?

Dan Halstrom: You hit on it anytime you have a business relationship you know; relationships are the key. And it's really the case when you're dealing with Asia. And more specifically with Japan. I mean, we've been dealing in Japan as an industry on beef and pork for, for decades for probably better than 50 years. And it's that buyer and seller relationship that's so important, but it really goes deeper. I mean, it's about country relationships and in the case of Iowa state relationship, that's been developed over the years. So, you know, having a comfort level with who you're dealing with and an understanding of the products that they produce, the safety and integrity and quality of those products are all key attributes that, you know, something like the hog lift, you know, years ago, the 60th anniversary was really a great way to get this relationship started. And we're seeing the fruits of it in the, in the results today.

Dirck Steimel: So as you mentioned, Japan's a good market for U.S. pork, beef, and other ag products. Why is U.S. pork and beef so popular in Japan?

Dan Halstrom: I think there's several reasons. I think number one, safety and integrity. I think the Japanese market understands the over the years has really come to understand our production processes and a high level of quality integrity comes with it. So that's kind of the foundation of your house, so to speak if you don't have that, you don't do business in Japan. Then from there, it becomes more of a comfort level with the people you're dealing with. And, and the state of Iowa, you know, is one of the best in doing that. And one of the largest suppliers of pork in particular, but beef as well. And over the years, there's different programs that have gotten established and you know, like I said, 60 years and running that's how long it's taken to really develop this business. And in Japan until this year has been the largest market for U.S. beef and pork. Pork will be number two this year in 2020, because of the situation in China, which is a bit of an anomaly with African Swine Fever. But I would say consistently the largest destination for U.S. beef and pork exports has been Japan. And we, we can, we expect that to continue.

Dirck Steimel: Earlier this year, the United States and Japan entered a trade agreement. How has that trade agreement effected U.S. red meat exports to Japan?

Dan Halstrom: I'm the biggest fan of that? U.S. Japan ag agreement if it's not the biggest deal ever for U.S. beef and pork producers, I would say it's definitely the biggest deal since BSE hit in 2003 in the U.S. we were at a severe disadvantage prior to that in 2018 and 19 severe disadvantage because a lot of our competitors entered the TPP agreement, the Trans Pacific Partnership, and the U.S. opted not to join that. And instead to work a bilateral agreement, which ended up working out just fine, but it took some time. And the implementation date was January one, 2020 for the U.S. Japan ag agreement. And this was our replacement for what we thought was going to be the TPP. This, this was huge. We had a 13% duty disadvantage for U.S. beef going into Japan in 2019. And when we hit January one earlier this year in 2020, we were on the same playing field as Australia, as Canada, as Mexico on the beef side. And the pork side had a similar issue, maybe not as big of a duty disadvantage, but two different sections of pork had a disadvantage. One was ground seasoned pork, where we were at about a 7% duty disadvantage. We became equal to our major competitors, which was European Union, Canada and Mexico. And then also on fresh pork the variable levy, a duty implication, we were about a 2% duty disadvantage for fresh and frozen pork. So on both species this was just a huge positive impact for the U.S. beef and pork industries. And I'm happy to report that 11 or 10 months into the year, as far as our export stats are concerned. January through October export stats this year would indicate that we have about a 3% gain in market share and beef, mainly at the expense of Australia. And we have about a two, two and a half percent market share increase on total pork mainly at the expense of, of Europe and on the ground season pork side, the increase is even more dramatic. We're up about 25% year on year. Just because of those changes on the duties and getting U.S. on a level playing field. So very, very big deal, a very, very important deal for the U.S. and an Iowan beef and pork producers.

Dirck Steimel: Well, let's talk about pork exports in general. They've been very strong in 2020, despite the global pandemic. What factors are behind that strong demand for U.S. pork?

Dan Halstrom: I think it starts with a couple of things. Number one is that the country of Japan is 50% self-sufficient at best for pork production. So their demand is far outstripping their supply. This, this is nothing new. This has been the case for decades. Although I think that that gap is widening and the dependence on imports continues to increase as their demand increases. So that's a very, a very base level of, of driver. But I think if you look at the higher level of demand on pork specifically they're wanting safety, they're wanting quality. And the U.S. is one of the highest standards on both. So I think you combine all this together. Part of the reason their consumption and their business is growing over there is because of their ability to import. The other key thing that drives our business is that traditionally a lot of the imports are frozen the European Union being our largest competitor on the frozen pork side. But the, one of the real drivers in growth has been the chilled market vacuum pack chill, never frozen product. That's sent from the U.S. over to Japan. And a lot of this goes directly into what we call the table meat market or into the consumer ready market at retail. And this particular segment is, is growing by leaps and bounds. And you know, our competitors they're of course our main competitor is Japan, domestic pork, but the imported would be primarily Canada and Mexico and European Union's not able to ship chilled pork by vessel. So these are the drivers and play. These are the aspects that are really where the majority of the growth is. If you look at it from a very high level.

Dirck Steimel: And then when you look around the world, what factors are supporting pork exports worldwide?

Dan Halstrom: I think pork is a very versatile protein. So we're seeing per capita consumption growth rates around the world grow and far outstripping. The supply. Japan is one example, but you've got other places you've got Korea, Mexico, Central and South America. One of the largest percentage growth rate countries in the world for U.S. court is Columbia. And they have, they have their own domestic pork industry, but once again their demand far outstrips their ability to supply themselves. So this is really the mantra across the world is you know, taking product from the countries that have the grain. I mean, the U.S. has a very ample supply of grain where we're able to use it as feed for livestock. And a lot of other parts of the world do not. Asia is a classic example. They, they have to import their grain are not nearly as efficient nor do they have the space for the production. So these are all advantages that the U.S. in particular can use to, to maximize the business opportunity globally with a lot of these markets. So I think you add that all up, and it's a really good story for the U.S. beef and pork industries.

Dirck Steimel: And why is export demand so important for livestock farmers here in Iowa and all over the country?

Dan Halstrom: Great. Well, it's about, it's about the math. It's about adding value. It's real basic in any business. It's always pretty much better to have more customers rather than less. So if you're a, a row crop farmer that has livestock you know, the, the ability to export corn is very important, but the ability to export meat from livestock that you're raising diversifies your portfolio. So, so I think in that aspect the ability to export livestock through meat is it's a growing area, and it's about maximizing that value per head. So if you look at, I'll give you the most recent numbers, the contribution of you look at the beef side, you're over $300 per head slaughtered value increase in value due to the exports of beef globally. On the pork side, it varies a bit, but it's right in that 50 to $60 range as well, year to date this year on the pork side, we're looking at real close to $50 per head for every animal, every pig, animal slaughtered. So, you know, it's about putting the right cut and a right market to maximize value. So I'll give you one pretty good example, pork and beef variety meats. There's some demand in the us, but, but for the most part, if you're looking at pork tongues or beef tripe, or pork intestines, not a real big demand item in the U.S., Well, there's a lot of markets around the world where that's a delicacy and much preferred. So you see the, the exporters' and the Packers, they're sending a lot of the beef and pork variety meats outside the U.S. to maximize the value of what they can get in the U.S. so this is really the beauty of it is to put the right cut and the right market to maximize that total carcus value.

Dirck Steimel: Looking ahead to 2021, what's the outlook for pork and beef and exports as we look forward?

Dan Halstrom: Well, let's start with beef this year in 2020, we're forecasting to be down just slightly from 2019, it's going to be in a neighborhood of probably 3% down. But the good news is that we're seeing the fourth quarter of this year, which we just got the October stats today. You know, we're up significantly year on year for the month of October on beef or up a couple percent. But our forecast is for the 2021 for a robust rebound. As we see a lot of these countries around the world emerge from the COVID-19 impacts, we're food service has been shut down. U.S. beef is a big item at food service globally. So we're, we're seeing we're seeing forecasts for rebounds in Mexico, Korea. Japan is already starting to show growth the fourth quarter of this year. So we see that extending into 2021. And our forecast for 2021 is about 10% growth on the beef side versus 2020 on the pork side this year 2020 is going to be a record by far. A lot of that is due to the large volumes going into China, where their African Swine Fever situation domestically. We do see the, the rate of growth slowing down in 2021 as they start to repopulate in China. So, our growth we're, we're still going to see, we think another new record in 2021 with growth of between two and 3% is our forecast right now. So China will drop down. They'll still be a big year, but not nearly as big as 2020, but we see other markets like Japan, like Mexico, like Korea, like Central America. We see other markets picking up the slack on the pork side in 2021.

Zach Bader: We definitely appreciate Dan making time to join us on the podcast. I know that 2020 has been an especially tough year on those of you who raised livestock. So it's good to hear Dan talk about the positive outlook for U.S. meat exports, as we look into 2021 and beyond, okay, as we start to wrap up this episode of the podcast, I want to bring your attention to a few unique opportunities. We're offering farmers and ag professionals over the next several weeks. The first opportunity is a series of webinars that we're offering Iowa Farm Bureau members in place of in-person experts that we typically bring to Iowa Farm Bureau's annual meeting. That series includes a look at lessons learned by restaurants, grocery stores, and livestock farmers, while responding to COVID-19 as well as future projections by economists and other ag experts. The series is going on right now, and you can learn more IowaFarmBureau.com. The second opportunity that's going on right now is a chance to show your support for 10 young ag entrepreneurs who are competing for cash prizes up to $7,500 in Iowa. Farm Bureau's Grow Your Future Award competition. December 17th is the deadline to go out and vote for your favorite ag entrepreneur. And again, you can head out to Iowa Farm Bureau.com to do that. Looking ahead, into early 2021, we're really excited to be offering an Economic Summit Webinar series for you. That series is going to begin in mid-January, and it's going to feature a wide range of national experts. You're going to hear a lot more about that and upcoming podcast episodes. And of course, check out those details on Iowa Farm Bureau.com. We also encourage you to stay tuned for our latest announcements regarding the updated plans for Iowa Farm Bureaus, 2021 young Farmer Conference. That's another topic we'll be talking about an upcoming podcast episodes. And as with everything else, you can find the very latest IowaFarmBureau.com. With that I'll wrap up this episode of the Spokesman Speaks podcast. Our next regularly scheduled episode is December 28th, and we hope that you'll join us for that. In the meantime, the Spokesman Speaks team and all of U.S. at the Iowa Farm Bureau would like to wish you and your families a Merry Christmas and a happy holiday season. Thanks for doing the work that inspires everything that we do here at the Iowa Farm Bureau. And thank you for listening to the Spokesman Speaks.

Narrator: Thank you for listening to the Spokesman Speaks a podcast by Iowa Farm Bureau. Check out more podcast episodes IowaFarmBureau.com/podcast. You can also find and subscribe to the Spokesman Speaks podcast in the Apple podcast app, Google podcasts, Spotify, iHeartRadio, and other popular podcast apps. We appreciate your ratings and reviews, and we welcome you to email us your feedback at podcast@ifbf.org.


About The Spokesman Speaks Podcast
Since 1934, The Iowa Farm Bureau Spokesman has been Iowa’s leading agriculture news source, and today it has the largest readership of any ag newspaper in Iowa. While The Spokesman newspaper is available exclusively to Iowa Farm Bureau members, The Spokesman Speaks podcast is available publicly, providing the ag news and farmer education that matter most. You can find episodes of the podcast here or subscribe and listen in your favorite podcast app, such as Apple Podcasts, Google Podcasts, Spotify, iHeartRadio, Stitcher, TuneInRadio, or Radio.com.


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