Mexico’s concern over North American Free Trade Agreement renegotiations sparks the country to begin seeking other viable options for pork supplies, reports pork leaders during a press conference held at the World Pork Expo in Des Moines, Iowa, last week.
While Mexico appreciates and values the pork trade relationship with the United States, they too have reservations over the Trump administration’s intentions to revamp NAFTA. “They want to continue the positive relationship that we have with them, but they are very concerned,” says Maria Zieba, National Pork Producers Council deputy director of international affairs.
Last year, 26% of U.S. pork and pork variety meat was exported with the largest volume shipped (730,000 metric tons) to Mexico, accounting for 90% of the pork imported into the country. U.S. exports to Mexico are coming off a fifth consecutive volume record in 2016
During March, the National Pork Board trade team traveled to Mexico City, building trade relations and pursuing new trade opportunities. The delegation invested its time immersing itself in Mexico, which is one of America’s most important export markets. Zieba and other NPPC staff accompanied the NPB members and staff on the trip.
“Our visit to Mexico was eye-opening. As board members, we were able to witness why Mexico is such an important trading partner,” says Jan Archer, NPB immediate past president and a North Carolina pig farmer. “The average Mexican family spends 30% to 40% of its income on food, so they appreciate the ability to access safe, nutritious and affordable U.S. pork.”
If the United States withdraws from NAFTA, Mexico is likely to place a 20% duty on pork. The fear of imposing a 20% duty on various products sent Mexico researching other potential suppliers of pork. “The biggest worry for us and what we heard is they are looking at other markets. They are looking at diversifying where they purchase their pork from,” stresses Zieba.
Global pork trade is extremely competitive. Other leading pork-producing countries are eager to step up and supply Mexico with pork. As U.S. exports to Mexico comes off a fifth consecutive volume record in 2016, the U.S. pork producers understand the economic impact of trade with its No. 1 volume customer.
America’s pig farmers export pork to more than 100 countries worldwide. However, the United States ships more pork to the 20 countries with free trade agreements than all other countries combined. Market access through free trade agreements is essential to selling additional pork.
John Weber, NPPC immediate past president and Iowa pork producer, says while gaining new market opportunities is a leading offense priority, its top defensive priority is NAFTA. “We want to protect pork exports to two of our biggest markets – Canada and Mexico,” explains Weber.
The United States withdrawing from NAFTA would be devastating to U.S. pork producers. Iowa State University economist Dermot Hayes calculates that if Mexico places a 20% duty on U.S. pork, the industry eventually will lose the entire Mexican market. Consequently, this would result in a 5% loss in pork production, 10% reduction in the live hog market which will ultimately cost America’s pig farmer $14 per pig or an aggregated loss of nearly $1.7 billion to the U.S. pork industry alone.
“We are asking the Trump administration to ‘do no harm’ to agriculture when renegotiating NAFTA,” stresses Weber. “For our industry, that means maintaining zero tariff rates on North American trade.”
Pork leaders recognize that NAFTA is not a perfect agreement for all sectors of the U.S. economy. NPPC supports the modernization of NAFTA. However, the organization firmly asks for no tweaks to NAFTA when it comes to pork trade.