There’s no denying that pork exports are continuing to take a big hit this year from trade disputes with Mexico, China and Canada. On AgriTalk Monday, Joe Schuele, vice president of communications for the U.S. Meat Export Federation (USMEF), talked about how pork exports are holding up as 2018 comes to a close.
“Pork exports are seasonally higher than we’ve seen in recent months, but still down a little bit year over year,” Schuele said of the October data released by USDA and compiled by USMEF. “We continue to see pressure, especially on pork export value, from those retaliatory duties.
“Right now we are facing a 20% duty on most of the pork that goes into Mexico, whereas that is usually duty-free, And in China, we're facing a 62% tariff which is five times the normal tariff, the rate that most everyone else that that sells pork to China is facing of 12%. So, it makes it a pretty difficult market.”
Many countries have stepped up their purchases this year. Schuele said U.S. pork is doing very well in Central and South America, as well as Australia, which is the U.S.’s third largest market for ham exports behind Mexico and China. The U.S. has already set a record for pork exports to South Korea this year.
“But it's still frustrating that we won't reach our full potential until those retaliatory duties are out of the picture,” he says.
In Mexico, the U.S. is uniquely positioned geographically, and in terms of infrastructure, to provide fresh pork to that market, Schuele says. Some of this fresh pork goes to retail and food service, but a lot of it goes into further processing. However, the 20% tariff is a roadblock long-term.
“It’s unrealistic to think that the end customer is going to pick that up,” Schuele said. “So what we’re seeing is everybody in the supply chain absorbing part of that 20% the Mexican government is essentially taking off the top.”
With fewer natural advantages in China, Schuele said export volumes are being hit harder there, especially on lower-value items such as feet and ears that are popular menu items in China. Some of these lower-value items have become economically infeasible to export, resulting in more severe product dropoff.
There's also a lot of speculation about China having a greater need for pork in 2019 because of their decreased pork supply due to African swine fever.
“I think it's too early to say exactly how that will play out,” Schuele says. “But if they have an increased need for imported pork, that's certainly a train we don't want to miss. We need to be positioned to help fill that need.”
So, how do exporters feel about the hurdles they’ve faced this year?
Well, with China, it's never entirely clear exactly where the relationship is going, Schuele says.
“I think most of our exporters aren’t looking for any foreign government to commit to buying,” he says. “Just remove the obstacles and let us be on a level playing field.”
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