With falling prices, U.S. pork seeks new world markets
Jeff De Young, Iowa Farmer Today
via Globe Gazette (IA) - Jan 3, 2019
Retaliatory tariffs on Iowa’s hog industry have already cost producers more than half a billion dollars since being implemented by China and other countries earlier this year.
Dermot Hayes, an economist with Iowa State University, said a recent ISU study estimates the overall loss to Iowa’s gross state product to be $1 to $2 billion.
“We estimate pork producers are losing about $20 per head because of the tariffs,” he said. “We slaughter 10 million pigs a month, so that’s $200 million we are losing.”
Hayes said the losses will continue to mount as long as tariffs remain in place. He said pork production is expected to increase 3 to 4 percent in 2019.
“It’s hard to get Americans to eat that much more pork,” he said. “We are selling at discounted prices to places like South Korea, Mexico and Colombia. Pork’s been very cheap.”
The lower prices have also resulted in record amounts of U.S. pork being sold into Central and South America.
“That’s good, because we are opening up those markets more,” Hayes said. “People in these countries are getting used to eating modern pork, and that will help them stay customers. That’s a good thing that has come about because of the trade issue.”
While Chinese tariffs garner most of the attention, the largest hit may be coming from Mexico.
A report from the U.S. Meat Export Federation said the 20 percent tariff has basically eliminated any benefit from NAFTA.
“To minimize the impact on pork prices and encourage imports from non-U.S. suppliers, Mexico has established a duty-free tariff rate quota for 350,000 metric tons of chilled/frozen pork that will be open through the end of 2018,” the USMEF said in the report.
“Import licenses are distributed on a first-come, first-served basis, with 97 percent of the volume allocated to companies that imported these products last year.
“WTO rules require new market access to be open to all eligible suppliers, so Mexico does not explicitly exclude U.S. product from the quota. However, it is understood that all chilled/frozen pork cuts imported from the U.S. will be charged the 10 percent (and later 20 percent) duty.”
According to the USMEF, the U.S. has supplied about 90 percent of Mexico’s chilled and frozen pork imports in recent years, with the other 10 percent coming from Canada.
“Imposition of new duties on U.S. pork and implementation of the new pork TRQ will likely result in lower volumes of U.S. pork exports (and) lower U.S. prices, especially hams, where Mexico purchases roughly 45 percent of total U.S. production and accounts for 86 percent of U.S. bone-in ham exports,” the report said, adding new competition in the market will also lower the U.S. share.
The USMEF is also expecting more U.S. turkey to be imported...