‘Profitability has been jeopardized in the pig industry’
By CHAD THOMPSON
Recent taxes imposed by China on U.S. pork products will have far reaching impacts that will be felt on a local level, according to Gregg Hora, president of the Iowa Pork Producers Association.
President Donald Trump recently imposed tariffs on about $50 billion worth of Chinese imports, including Chinese steel, according to published news reports.
China responded by placing a 25 percent duty on U.S. pork, among other American-made goods, according to Hora, a Fort Dodge resident.
Hora, who owns a hog and crop farm in Webster County, said the tariffs are concerning for pig farmers, pork processors, and American consumers.
“That becomes an increased cost for American exporters taking that pork into China,” Hora said. “The market has been reflected with nearly a $20 per head drop in price of pigs in the last four weeks.”
He added, “Profitability has now been jeopardized in the pig industry because of a trade war that pork is being used in. For local producers, Iowa producers, U.S. producers, it’s very concerning.”
According to Hora, 27 percent of all pork raised in the U.S. in 2017 was exported.
China imported about 3 million tons of pork from the U.S. in 2017. Its value was estimated at $1.16 billion, ranking third in total value for the U.S. market, Hora said.
“When you start to lose market share, it reflects a big impact on the packers, the farmers and the distribution system,” he said.
In particular, China buys large amounts of what’s called pork variety meats, which includes the organs, glands and extremities of the pig.
“Those are the lesser cut of meat that is very important that we have an export market for,” Hora said.
The European Union accounts for almost 60 percent of the pork China brings in, Hora said, making it China’s No. 1 pork importer.
“The United States has had about 14 percent of that market share going into China and Canada has had about 14 percent of imports going into China,” he said. “The fallout will be, with less competitive prices from the United States, that will be filled by European and potentially Canadian pigs.”
He added, “What’s interesting is that the Canadian pig pricing is based on U.S. markets, so Canada is not happy about this retaliation and trade disputes between the United States and China because it will affect their competitiveness also.”
Canada, along with Mexico, are the top two importers of U.S. pork.
“We cannot afford to have rural America and pig farmers to have further disruption of our market channels,” he said. “This trade that we export our product to accounts for about $54 per head of U.S. marketed pigs. That has to do with the value of pork that other countries buy from us on per head basis.”
Hora is hopeful, however, that relationships with international customers will be resilient.
“We are very disappointed at this time, but we are hoping the relationships we have had with our overseas buyers can be strengthened in the near term, so that the supply chain of exported pork to our overseas consumers will not be disruptive for a long period of time to U.S. pig farmers,” he said.
Hora said it’s not just producers who will likely be affected by the trade war.
“The cost of tariffs or taxes that are passed on with the trade wars really hurts consumers,” he said. “Consumers will end up paying more for products in the stores. Not just meat products, but other products that will be inhibited because of free trade opportunities.”
Hora said almost 100 different products will be impacted by China’s retaliation.
“American consumers will lose the ability to have favorably priced consumer products whenever there is a trade dispute that goes on,” he said. “American consumers will take the financial hit on this.”
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