U.S. Pork Industry Sees $25 Billion China Market Without Tariffs
Mike Dorning, Bloomberg
via Yahoo Finance - November 26, 2019
(Bloomberg) -- U.S. pork producers see a potential $24.5 billion market in China within 10 years if the Trump administration can gain unrestricted trade access after the Asian country’s hog herd has been devastated by disease.
The National Pork Producers Council released the forecast on Tuesday as they pressed the Trump administration to emphasize access for pork products in ongoing talks with Beijing for a partial trade agreement.
The spread of African swine fever has ravaged China’s hog herd and by September had driven up the price of pork more than 69% from a year earlier. The meat is a staple in the Chinese diet. While American exports have climbed amid the Chinese protein gap, meat suppliers in Brazil have seen even stronger demand.
“The U.S. pork industry is missing out on an unprecedented sales opportunity in China when it most needs an affordable, safe and reliable supply of its favored protein,” David Herring, president of the producer association and a hog farmer from Lillington, North Carolina, said in a statement.
Dermot Hayes, an Iowa State University economics professor who performed the analysis, said the projection was based on a “best-case scenario” in which China drops all tariffs and barriers to pork imports, including speeding up customs processing to allow for imports of chilled pork.
The Asian country had a 12% duty on frozen pork before the trade war and has now added a 60% punitive tariff. Currently, China’s customs processing is restricting imports of non-frozen U.S. pork, Hayes said.
Hayes said the analysis assumes that Chinese consumption of pork would rebound to its level prior to the swine fever epidemic. He concluded that the nation’s domestic industry wouldn’t return to prior production levels if tariffs are dropped now on U.S. pork since the American product is significantly less expensive than the cost to produce in China.
Hayes projected that without tariffs, China would import 35% of its pork -- a level similar to Mexico and Australia after they concluded free-trade agreements -- and U.S. producers would capture half that market. The gains in U.S. pork exports would add...