“We’re all better off with trade,” stated Dermot Hayes, Iowa State University’s pioneer chair in agribusiness, as he began his afternoon presentation at the World Pork Expo titled, appropriately, “World Market Economics and the Importance of Trade.”
Watch a video of Hayes' presentation: www.WATTAgNet.com/168569.html.
According to Hayes, as demand grows and countries open their borders to allow for free agricultural trade, the U.S. pork industry is uniquely positioned to profit from pork exports. To date, a quarter of U.S. pork production is exported, a figure expected to grow due to low U.S. production costs.
While Brazil ranks No. 1 in its ability to grow least-cost pork, it is unable to bring its product to market because of its lackluster infrastructure. This weakness bumps up the U.S.’s ranking based on its ability to capitalize on its efficient production system and land availability.
For example, in some countries it’s cheaper to import frozen pork products and then import/grow the raw feed ingredients. The result: reduced production of commodity grains; better utilization of the land by planting more labor intensive, high-return products; and import what it’s not cost effective to produce.
Beyond value markets like Japan, who demand the best, most expensive cuts, the real opportunity for U.S. pork producers lies in the “fifth quarter” as they sell into international markets where “variety meats” can be sold at a premium.
Meanwhile, much of this progress hinges on the success of our ability to enter into positive trade agreements. The Trans Pacific Partnership has stalled due to Japan’s requests regarding “sensitive ag products."
“Japan wants duty on imported pork so it can give subsidies to their pork producers,” Hayes explained, demands the National Pork Producers Council deems “special treatment” that could set the precedent among all TPP members, costing the U.S. pork industry a lot of money. (Japan refuses to eliminate gate price, tariffs and protections.)