Trade wars have hit the pork industry. Two of the top three export destinations for U.S. pork have added a tariff in retaliation of United States tariffs on other products.
Jim Heimerl, president of the National Pork Producers Council and pork producer from Johnstown, Ohio, told members of the media on June 6 during a news conference at the 2018 World Pork Expo in Des Moines, Iowa, that Mexico is the latest country to add tariffs to U.S. pork.
“Mexico is our second largest export market, with China being our third. Pork trade with these two countries is imperative for our industry,” said Heimerl. “In 2017, $6.5 billion in pork was exported. We have seen recently the new trade environment, but we need to renegotiate trade deals with these countries to keep our prices where they need to be.”
Heimerl mentioned the importance of exports to Japan—the No. 1 market for U.S. pork—and expanding into other new and emerging markets.
Nick Giardano, vice president and counsel, global government affairs for NPPC, said the organization is working with government leaders to discuss how to resolve the tariff disputes so pork producers are no longer suffering.
“This is painful for us right now, but we give pork producers a lot of credit to give Secretary of Agriculture Sonny Perdue and President Donald Trump the power to get this turned around for American agriculture,” Giardano said.
In late May, China announced a 25 percent punitive tariff on U.S. pork in retaliation for U.S. tariffs on aluminum and steel. On June 5, Mexico announced a 10 percent punitive tariff on unprocessed U.S. pork, expected to escalate to 20 percent on July 5. These tariffs could reduce live hog values as much as $18 per animal or over $2.2 billion on an annualized basis according to Dermot Hayes, Iowa State University economist.
“The toll on rural America from escalating trade disputes with critically important trade partners is mounting,” Heimerl said. “Mexico represents nearly 25 percent of all U.S. pork shipments last year. A 20 percent tariff eliminates our ability to compete effectively in Mexico.
“This is devastating to my family and pork producing families across the United States.”
In 1995, the U.S. was a net importer of pork and now the U.S. exports 27 percent of the pork produced. That growth took time, according to Neil Dierks, NPPC CEO.
“Most producers are at break even or below right now. We need to work through these negotiations and build new export partners to help our producers,” Dierks said.
Exports boost bottom line
Craig Morris, vice president of international marketing for the National Pork Board said U.S. pork exports add $54 per head to producers’ bottom lines.
“We need to know where the pork is going to go. We know what consumers want and that is our safe U.S. pork. Mexican consumers are replacing other meats with pork,” Morris said.
The Pork Checkoff and U.S. Meat Export Federation are working together on Pork 2040 to dive in and see what exactly the international customers want and where emerging markets are for U.S. pork. This study will provide the industry with a deeper, more holistic view of the current and future situation for U.S. pork exports.
John Hinners, USMEF assistant vice president for industry relations, said his group is continuing to work with government officials to have them talk with governments from Mexico and China to resolve the tariff issues.
“Duties are never good for anybody, especially how it relates to the consumer,” Hinners said. “The big concern we have is that we have built a great customer base in Mexico and it has been done with a lot of hard work. Hopefully the good customer relationship will keep them coming to us. USMEF is continuing to build those relationships based on food safety, abundance of quantity and all of the attributes we have in this industry and hopefully price doesn’t dictate sales.”
USMEF numbers show Mexico received 34 percent more U.S. pork in April than 2017 numbers, the second largest on record. Through the first four months of 2018, exports to Mexico were 7 percent above last year’s record volume pace with value up 6 percent to $505.4 million.
“Foreign consumers want our pork because they know it is the safest in the world, but often times the government takes precedence over what we want,” Heimerl said. “That’s why we have to keep negotiations open.”
“We are taking with the administration regularly to remind them this is hard on pork producers,” Giardano added. “The best thing the general public can do right now is eat more pork.”
Jennifer Carrico can be reached at 515-833-2120 or [email protected].
