Pork Producers Look to Trade for Boost

June 15, 2015 01:45 PM
Pork Producers Look to Trade for Boost

Pork chops, bacon-- you name it. Despite higher price tags last year due to a perceived pork shortage, these products have been in high demand.

“Domestic meat demand has been outstanding the last several years,” says Steve Meyer, Vice President of Pork Analysis for Express Markets, Inc.

Now the industry hopes demand will increase internationally, as appetites grow in other countries. 

 “TPP (Trans Pacific Partnership) as we look at it, is the single greatest economic driver in trade that we've ever seen or will ever see on the pork side,” says Ken Maschhoff, National Pork Producers Council (NPPC) Vice President.

The Trans Pacific Partnership is currently being negotiated among a dozen countries, all located along the Pacific Rim. Those countries account for 40 percent of world trade.

The sticking point for pork has been Japan with the country threatening to only reduce tariffs by half.

“In the last decade, we have always gone to zero with our tariffs,” says Howard Hill, Past President of NPPC. “So, that's what we expect out of the TPP partners."

Pork producers say if tariffs are eliminated, Japan has the potential of becoming the united sates' highest value market.  Meyer says that would be a game changer for the amount of pork shipped. 

“If those are successful, they will take a part that safeguard mechanism that has caused us to have to ship very high value product to Japan and open up all of that lower value market that's basically not available to us now,” says Meyer.

That's in addition to the $6.6 billion worth of pork already shipped each year, accounting for nearly a third of total production here at home. However, so far this year, exports to the Asian market have been very weak. Maschhoff says the recent port labor disputes in the west coast are partially to blame.

“We export 60 percent of our pork, goes on water,” says Maschhoff. “Of that, 80 percent goes off West Coast Ports.”

Meyer thinks it's the long-term impact from Port closures and delays that could cut deeper. 

“We've kind of burned some bridges as a dependable supplier,” explains Meyer. “We've got to go back in and reestablish those relationships and reearn that shelf space for retail in Asia, that’s going to take some time to overcome that."

Another trade relationship that needs strengthened is China.

“Long-term, we still think China is a large growth market,” says Meyer. “You've got 1.3 billion people, you've got a huge number of them moving to the middle class, they cannot raise enough pork to feed that population.”

Meyer says the strong U.S dollar is also hurting exports to china. They can simply get pork from the EU, Canada and Brazil cheaper.

But today, it's the strong demand from our neighbors to the south that's driving exports; however, what happens in country of origin labeling is weighing on the market. 

“Mexico last year for the first time for a year, remains well ahead of japan this year. The concern there is country of origin labeling tariffs and what that might do."

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