More than 26% of pork produced in the United States in 2017 was shipped abroad, adding $53.47 per head to America’s pig farmers’ returns. Any trade disruptions would be painful. So, when President Donald Trump proposes changes to free trade agreements or tariffs on goods from a trading partner, it puts the nation’s pork producers on high alert.
Neil Dierks, National Pork Producers Council CEO, tells National Hog Famer, that last year the organization spent the majority of the time on trade while not losing focus on the regulatory front.
“It has been a very different kind of year. On the regulatory front, it was hard to keep up with everything because we have been playing defense for so long suddenly there were opportunities to protect producers through regulatory reform,” Dierks says, reflecting on the year for the nation’s pork producers. “On the reverse side, the first time in my career I have ever seen the industry needing to play defense on trade issues.”
NPPC has made its voice heard as President Trump wants to revamp the North American Free Trade Agreement or threatens to pull out of the Korea Free Trade Agreement. Korea and NAFTA countries account for half of the U.S. pork exports.
Quoting Glenn Grimes, economist who passed away in July, Dierks says, “For every 1% change in supply you have 2-3% invert change in price.”
Last week, Trump announced his plan to impose tariffs of 25% on steel imports and 10% on aluminum across all countries. The action, agriculture groups warn, could start a trade war, placing a large target on U.S. agricultural goods.
U.S. Commerce Secretary Wilbur Ross last week recommended that Trump impose measures against foreign suppliers of the metals in the name of national security, the latest sign of a tougher stance on trade by the administration.
While it is a wait-and-see mission today, the agriculture industry fears the action will trigger retaliation.
“The fear is that if there is retaliation, these countries will look at what products they’re importing and put duties on them,” states Dierks. “When we look at total exports in these countries, agriculture leads it. It is just common sense if someone is going to get a whack, agriculture is a candidate, and we are very concerned about that.”
And that is exactly what China warns. “If the United States’ final decision affects China’s interests, we will take necessary measures to defend our rights,” says Wang Hejun, a senior official at China’s Commerce Ministry, reports news agency Xinhua.
Last year, China accounted for 17% of the U.S. pork exports. China is not a loin market. One of the beauties about China is it takes pork products not consumed domestically, like snouts and ears. “Things that aren’t in great demand in our country, but it raises the value of the carcass,” Dierks explains.
He recommends U.S. pork producers stay on high alert during this period of wait. “Pay attention. Steady as we go. Be prepared to make your voice be known if we end up being dinged on this,” Dierks stresses.