Hog farm National Pork Board

Trade wars costing hog farmers $2.2 billion so far

Pork leaders call for resolution as trade retaliation continue to hurt U.S. pork producers’ bottom line.

Source: National Pork Producers Council
The National Pork Producers Council is calling for a swift resolution of the United States-China trade dispute, paving the way for increased U.S. pork exports to the world’s largest pork-consuming nation. U.S. pork producers have lost $2.2 billion on an annualized basis due to events leading up to and following China’s 25% punitive tariffs in retaliation for U.S. tariffs on aluminum and steel, according to Iowa State University economist Dermot Hayes. 

“U.S. pork has invested significantly to ramp production to capitalize on growth opportunities around the world, including China and other markets throughout the Asia-Pacific region,” says Jim Heimerl, a Johnstown, Ohio pig farmer and NPPC president. “We applaud the administration for making the expansion of agriculture exports a cornerstone of the discussions with China. We hope the next round of trade talks with China results in improved market access to a critical export market for U.S. pork and other farm products.”

At the beginning of April, China imposed tariffs on $3 billion worth of U.S. imports including pork, counteracting the Trump administration’s move to slap tariffs on steel and aluminum imports. The Customs Tariff Commission of the State Council decided to impose a tariff of 15% on 120 items of products imported from the United States including fruits and related products, and a tariff of 25% on eight items of imports including pork and related products from the country.

“Since March 1, when speculation about Chinese retaliation against U.S. pork began, hog futures have dropped by $18 per animal, translating to a $2.2 billion loss on an annualized basis,” says Iowa State’s Hayes. “While not all of this lost value can be attributed to trade friction with China, it is certainly the main factor.”

The market disruption caused by export market uncertainty comes at a time when U.S. pork is expanding production to record levels. Five new pork processing plants have recently opened or will soon begin operations, increasing U.S. pork production capacity by approximately 10% from 2015 levels by next year. Exports accounted for more than $53 of the average $149 value of a hog last year and support over 110,000 U.S. jobs. The United States has, on average, been the top global supplier of pork over the last 10 years.

“We produce the safest, highest-quality and most affordable pork in the world,” Heimerl adds. “We are dependent on exports and are one of the few sectors of the U.S. economy that can immediately reduce the trade imbalance with China, where pork represents approximately 10% of the consumer price index. Eliminating punitive tariffs and improving access to China by eliminating or reducing tariffs on frozen and chilled pork would result in an explosion of pork exports, contributing significantly to U.S. economic growth and reduction of the trade deficit.”

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