U.S. pork producer losses exceed $2B

U.S. pork producer losses exceed $2B
Dec 04, 2018

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American pork producers are caught in the crossfire of trade wars with Mexico and China

By Kate Ayers
Staff Writer
Farms.com

The trade disputes between the United States, Mexico and China have cost American hog producers a total of over $2 billion on an annualized basis.

The National Pork Producers Council (NPPC) asked government officials to resolve these wars and relieve farmers from further punitive tariffs, an organization release said on Saturday.  

“We are very pleased with the new trade agreement with Mexico and Canada, one that preserves zero-tariff pork trade in North America for the long term,” Jim Heimerl, NPPC president and pork producer, said in the release.

“But it is imperative that we remove U.S. tariffs on Mexican metal imports so that retaliatory tariffs of 20 percent against U.S. pork are lifted.” 

Dermot Hayes, an Iowa State University economist, calculated this loss to be about $1 billion.

He based his calculations on an estimated $12 per animal price reduction because of Mexican tariffs imposed on American pork in June, the release said.

Dr. Hayes applied this price reduction to the estimated 125 million hogs harvested in the U.S this year.

In addition, China’s retaliatory tariffs have resulted in a $1-billion loss to American producers through an $8 per animal price reduction.  

The accumulated tariffs from Mexico and China turned a potentially profitable year into one marked with red for many hog producers, the release said.

“Producers are holding their own, but it has been difficult. Our farmers began the year expecting 2018 to be moderately profitable, but the situation changed dramatically,” Dave Warner, NPPC’s director of communications, said to Farms.com in an email statement today.

“Grain prices have been low because of large crops and trade disputes, (but) new export markets have been opened in South America. South Korea has also been an important growth market and Mexico continues to take U.S. pork, albeit at a lower price because of its retaliatory tariffs.”

U.S. pork producers are export dependant – Mexico and China typically account for nearly 40 percent of America’s total pork exports.

Recent progress with the United States-Mexico-Canada Agreement (USMCA) and trade resolutions provides producers with optimism for 2019.

“The outlook remains uncertain, with some bright spots, including the USMCA, giving reason for optimism,” Warner said.

However, “the Mexican tariff on U.S. pork and African swine fever spreading through China, are causing producers (to) pause.”  

 To learn more about recent trade relation talks between the U.S. and China, check out this link.

Pork Checkoff photo

 

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