Meat+Poultry - August 2018 - 14


Losing on pork
price pressure for both hams and
The US Meat Export Federation
picnics could result in industry losses
(USMEF) estimates the US pork
of $425 million for July-December
industry could lose more than $300
2018 and $835 million over the next 12
million for the remainder of 2018 and
$600 million over the next 12 months
In general, the report states, new
on a decline in ham primal value
duties can result in:
caused by Mexican tariffs that have
export volumes as
been placed on US pork products.
priced out of the
Mexico implemented retaliatory
tariffs on imports of most US pork
* lower prices and margins for
products in response to US tariffs
exported items as the trade adjusts to
on aluminum and steel. On June 5,
the new (higher) duties;
the tariff rate on chilled and frozen
* lower livestock prices in response
pork muscle cuts increased to 10
to the decrease in meat prices; and;
percent from zero. The tariff will
* longer-term losses in market
increase again to 20 percent on July
share due to trading partners' desire to
5, effectively wiping out the North
diversify away from the US.
American Free Trade (NAFTA)
Mexico already has
benefit, USMEF said.
established a duty-free tariff
"Given the growth
rate quota for 350,000
in US production
Canada will be
metric tons of chilled
and already large US
the most likely
and frozen pork that will
consumption, it is
of US-Mexico
be open through the end
likely that product not
trade tensions.
of 2018, with 97 percent
going to Mexico will be
of the volume allocated
absorbed in other export
to companies that imported
markets as well as in the
chilled and frozen pork products in
domestic market, at lower
2017. USMEF said import licenses are
prices," USMEF said in its report. "The
granted on a first-come-first-served
drop in the ham primal value could
basis, but the organization said US
translate into industry losses of more
companies have been unsuccessful
than $300 million for the remainder of
in applying for import licenses for US
this year and roughly $600 million over
the next 12 months. The added negative pork products.
"USMEF's understanding is that the
duty-free quota is specifically aimed
at Mexico's processing industry and

retailers are not able to purchase pork
at zero duty (beyond Canadian and
Chilean pork, where the potential for
supply growth is limited)," according
to the report.
Canada will be the most likely
beneficiary of US-Mexico trade
tensions. The European Union also
could benefit as roughly 60 slaughter
plants are approved to export to
Mexico with others waiting for
approval. Transportation and logistical
challenges will make it difficult for
Mexican processors to switch to
Canadian and European pork, USMEF
said, but increased Canadian and
European supplies of pork could result
in US market share dropping to 75
percent from the current 90 percent in
the second half of 2018.
"This would result in a decrease in
US exports of roughly 10,000 mt per
month or more than 60,000 mt for the
rest of 2018," USMEF said. "If unit values
hold at first-quarter levels, the drop in
export value to Mexico would be more
than $100 million over six months."
The US accounts for 90 percent of
Mexico's imports of chilled and frozen
pork with Canada supplying the other
10 percent, according to USMEF. In
2017, Mexico's imports of US pork
items subject to the new duties totaled
713,500 metric tons valued at $1.25
billion and accounted for 80 percent of
Mexico's imports from the US.
M + P S TA FF | m e a t p o u l t r y @s o s l a n d.c o m


MEAT+ POULTRY | 08.18 |

Ronnie Chua/

"The drop in the ham primal value could translate
into industry losses of more than $300 million for
the remainder of this year." - USMEF

Table of Contents for the Digital Edition of Meat+Poultry - August 2018