Trade disputes hurt US meat industries

As the U.S. and China have engaged in a trade dispute throughout much of 2018, American pork producers have taken a hit.

Morderska |
Morderska |

Editor’s note: This is the third in a series on tariffs and the trade dispute between U.S. and China that began in early 2018. Part I: US-China trade war: How did it all start? and Part II: How US-China trade dispute has affected soybean industry

As the U.S. and China have engaged in a trade dispute throughout much of 2018, American pork producers have taken a hit.

The United States has, on average, been the top global supplier of pork over the past 10 years, according to the National Pork Producers Council (NPPC), and China is the largest producer, consumer and importer of pork worldwide.

But U.S. pork prices and exports have been falling since the escalation of trade tensions between the U.S. and China and the U.S. and Mexico. In April, China imposed tariffs on many U.S. agricultural items, including pork and beef products and, in June, Mexico – the largest U.S. pork export market – also put tariffs on U.S. pork and other products. Tariffs on pork in China are 62 percent and up to 20 percent in Mexico.

In 2017, the U.S. exported a record of more than 5.39 billion pounds of pork and variety meats worth more than $6.48 billion, according to the National Pork Board. But U.S. pork exports to China are down sharply this year and pork exports to Mexico have also been declining, creating a surplus of pork for the U.S. market.

“As this trade war has heated up, it’s made the trade with China very difficult – to even stopping at various points – because the tariff that’s been imposed makes it not viable,” Kenneth Sullivan, chief executive of Smithfield Foods, told Reuters in October.

An Iowa State University study found that, from March through May, hog futures fell by almost $18 per pig, or more than $2 billion industrywide on an annualized basis. According to the NPPC, for the year, U.S. pork exports to China through June were down 9 percent; exports to Mexico were down 1 percent. Mexico, the U.S. pork industry’s No. 2 market, and China, the No. 3 market, accounted for 40 percent of total U.S. pork exports in 2017.

“U.S. pork, which began the year in expansion mode to capitalize on unprecedented global demand, now faces punitive tariffs on 40 percent of its exports,” NPPC said in a statement. “The restrictions we face in critical markets such as Mexico and China – our top two export markets by volume last year – have placed American pig farmers and their families in dire financial straits.”

NPPC says more than 60,000 U.S. pork producers market more than 115 million hogs annually, creating total gross income of more than $20 billion and 550,000 jobs.

“The toll on rural America from escalating trade disputes with critically important trade partners is mounting,” NPPC said. “Mexico is U.S. pork’s largest export market, representing nearly 25 percent of all U.S. pork shipments last year. A 20 percent tariff eliminates our ability to compete effectively in Mexico.”

How does this affect chicken, beef industries?

As the U.S. pork supply has grown, the chicken meat industry has taken a hit. According to the National Chicken Council, the U.S. chicken industry as a whole is expecting to lose money or break even in the fourth quarter of 2018.

Tyson Foods Inc., the largest poultry producer in the U.S., lowered its 2019 sales forecast by $1 billion to $41 billion, citing lower meat prices and growing supplies.

Pricing specials and promotions on pork, as well as beef, are easy for consumers to find in grocery stores and restaurants, while chicken is promoted less. According to the U.S. Department of Agriculture, per capita chicken consumption is expected to rise 1.2 percent this year, while pork consumption is expected to grow 4.3 percent and beef 2.6 percent.

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