Pork producers will find some relief in the near future from the impact of the U.S. trade dispute with China. On Thursday, the Trump administration announced a trade relief package for farmers.
USDA's trade retaliation relief program includes direct payments to qualifying pork producers, pork surplus purchases for the benefit of low-income families and others in need, and additional funding to develop new export opportunities. The amount of farmer payments and commodity purchases will be announced at a later date.
"We thank President Trump for recognizing that our patriot farmers have borne the brunt of China's trade retaliation," said David Herring, a pork producer from Lillington, N.C., and president of the National Pork Producers Council. "The U.S. pork industry has been one of the most adversely affected sectors, receiving a one-two punch in the form of a 50% punitive tariff from China on top of the existing 12% duty and, until recently, a 20% punitive tariff from Mexico. This trade aid will help repair some of the damage inflicted upon U.S. pork producers."
President Trump authorized USDA to provide up to $16 billion in programs this year, up from $12 billion in 2018, which is in line with the estimated impacts of unjustified retaliatory tariffs on U.S. agricultural goods and other trade disruptions, USDA said. These programs will assist agricultural producers while President Trump works to address long-standing market access barriers.
USDA also took a broader look at trade-distorting practices, said USDA Chief Economist Robert Johansson.
“We account for some other variables such as repeated distortionary trade policies by China and other countries that have contributed to the slow pace of market adjustment and trade that we've seen for agricultural production,” Johansson said. “So that brings us to the $16 billion level.”
Of that $16 billion, the bulk, $14.5 billion, is targeted for direct payments to farmers. The remaining amount is slated for commodity purchases through the Food Purchase and Distribution Program ($1.4 billion) and $100 million is to be issued through the Agricultural Trade Promotion Program to assist market development.
An Opportunity for U.S. Pork
China, the world's largest pork-consuming nation, faces a dramatic reduction in domestic supply because of African swine fever (ASF), a deadly disease of pigs, not people, that has ravaged its national swine herd.
“Until China gains control of the disease and is able to rebuild, however, it will need to look to other protein sources to meet consumers’ needs,” said Christine McCracken, RaboBank animal protein analyst. “China will need to expand its production of other proteins and ratchet up imports in an effort to fill the gap.”
However, the list of available countries to source the gap in protein supplies is short, which translates into a huge exporting opportunity for not just the U.S., but also Europe, Canada, Mexico and Brazil, McCracken said.
If China wants additional protein supplies, they’re going to have to come to the U.S., even with the tariffs, she said. The list of countries able to export enough pork to China is short.
“There aren’t a lot of options, and I think that’s a big part of why the U.S. should benefit,” McCracken said.
The current situation in China represents a historic sales opportunity for U.S. pork, Herring said.
“We look forward to continued work with the administration to restore favorable access to China, allowing U.S. pork producers to capitalize on this opportunity, reduce our trade deficit with China and deliver enormous benefits to the U.S. economy," Herring said.
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