This comes following estimates by Iowa State University economist Dermot Hayes that US pork producers have lost $2.2 billion on an annualised basis due to events leading up to and following China’s 25% punitive tariffs in retaliation for US tariffs on aluminium and steel.
“Since 1 March, when speculation about Chinese retaliation against US pork began, hog futures have dropped by $18 per animal, translating to a $2.2 billion loss on an annualised basis,” said 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 US pork is expanding production to record levels. According to the NPPC, five new pork processing plants have recently opened or will soon begin operations, which will increase US 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 supported more than 110,000 US jobs. On average, the US has been the top global supplier of pork over the past ten years.
Jim Heimerl, president of the NPPC, said: “US pork has invested significantly to ramp up production to capitalise on growth opportunities around the world, including China and other markets throughout the Asia-Pacific region. 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 US pork and other farm products.
“We produce the safest, highest-quality and most affordable pork in the world,” Heimerl added. “We are dependent on exports and are one of the few sectors of the US 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 US economic growth and reduction of the trade deficit.”