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Pork producers could see red

Pork producers could see red

Punitive duties on U.S. pork products could affect hog farmers’ profits

By Kate Ayers
Staff Writer
Farms.com

An ag economist predicts China and Mexico’s retaliatory tariffs on American pork will shift the profitability of the country’s pork producers from break even to losing money.

Trade was a hot topic at the World Pork Expo last week where stakeholders from across the globe met in Des Moines, Iowa, a Farmscape article said on Monday.

The reaction to U.S. tariffs on imported aluminum and steel could be costly for the country’s pork industry, Dr. Dermot Hayes, a professor and pioneer chair in agribusiness with Iowa State University, said in the article.

 “China placed a 25 per cent duty on U.S. pork on April 1 and, in the week before and afterwards, U.S. live hog prices stretching out a full year were down significantly,” he said.

Some American pork products are only destined for China and don’t really have an alternative market.

In addition, “Mexico imposed a 10 per cent duty on U.S. hams and shoulders and that will go to 20 per cent in early July,” Hayes said in the article.

Mexico will apply these tariffs to all chilled and frozen pork cuts, a U.S. Meat Export Federation (USMEF) release said yesterday.

A 15 per cent duty will be imposed on sausages and a 20 per cent duty will apply to some prepared hams. And Mexico is looking at other markets, such as the European Union, from which to import pork products.

Indeed, Mexico is the largest volume destination for U.S. pork exports, USMEF said.  

“Mexico and China are major export destinations for U.S. pork. Mexico represented 23 percent of all U.S. pork exports in 2017. China accounted for 17 percent of exports last year,” Jim Monroe, the senior director of communications for the National Pork Producers Council (NPPC), said to Farms.com yesterday.

“These tariffs dramatically reduce U.S. pork’s ability to compete with domestic producers and other exporters to these countries. U.S. pork producers are highly dependent on exports – we ship about 26 percent of all U.S. production – and are being seriously harmed by the trade disputes that prompted these retaliatory tariffs.”

Exports significantly increase the value of U.S. hogs marketed, NPPC said. The 2017 value market of hogs was US$96 per head without exports and US$149 per head with exports.

Iowa pork producers were aiming to break even this year but now they may face a loss of US$9 per head over the course of a year, Hayes added.

Pork is “one of the United States’ most competitive export products and (the industry) asks only for the chance to compete on a level playing field around the globe,” Monroe said.

“It’s critical that we eliminate trade uncertainty and allow U.S. pork producers to do what they do best: meet global demand for one of our nation’s most competitive export products, one that favorably impacts U.S. trade imbalances with countries around the world,” Monroe said. 

Other trading nations with the U.S. are also upset about the imposed aluminum and steel tariffs. Hayes is concerned that Japan may follow suit and enact punitive duties on American pork.

“Maintaining and expanding export opportunities is NPPC’s number one priority,” Monroe added.

“We are always working to improve access to existing markets or open new markets for U.S. pork. Argentina and Paraguay are among recent wins.”