The sheer numbers are staggering. With 1.2 billion people who eat about 21.5 kilograms of pork per person annually, China holds potential to be the United States most important pork export market.

USDA estimates that China could account for 37 percent of U.S. Agriculture’s future export growth.

Dermot Hayes, Iowa State University agricultural economist, did two separate studies on the potential value of the Chinese market for U.S. pork producers.

In his first study, Hayes looked at the impact if the Chinese market were fully opened to U.S. variety meats. This alone would add $5 per head to the U.S. live hog market.

China’s variety meat demand is a big advantage in exporting to that country, because it adds value to cuts that are underutilized elsewhere.

“The Chinese like to eat things that we don’t, like stomachs and intestines,” says John Cravens, director of foreign market development for National Pork Producers Council. “This allows us to provide them with products that have no value here, sometimes at a price of more than $1 a pound.”

Hayes went a step further in his second study. “It shows the effect of full Chinese accession, for both U.S. pork variety and muscle meats,” says Hayes. “Full accession could add $5 per hundredweight to U.S. hogs by 2010.”

To get that kind of increased value, the United States would need to export about 2 million tons of pork to China annually. However, having full accession in the next 10 years is probably not likely, given the political situation between China and the United States, Hayes admits. Still, even a portion of that would offer a significant value to U.S. producers.

Besides the obvious population and pork consumption numbers, China is potentially a huge cash cow to the United States for several reasons. First, more of China’s population is moving out of rural areas and into cities. Traditionally, much of Chinese pork production was done in the backyard and by a large portion of the population.

Another factor influencing China’s trading interests is the country’s lack of feed grains, which prevents it from producing pork competitively. The United States will be able to ship pork to China cheaper than the Chinese can produce it themselves.

“The bottomline will be cost,” says Cravens. “The United States is among the lowest cost producers and can gain market share in China by offering an affordable product.”

Quality will be a factor long-term, but for now most Chinese simply want pork they can afford.

Of course, the United States is not the only country able to supply China with an affordable, quality pork product. Canada, Denmark, the Netherlands and Brazil are also eyeing what stands to be the richest pork export prize ever. Producers in the Netherlands face severe environmental restrictions and can’t produce pork as cost efficiently as the United States. However, the same cannot be said of the other competitors.

“Everyone who produces pork is going after the Chinese market,” says Cravens.

There are obstacles that will need to be addressed before any country will strike it rich in China.

Foremost for U.S. producers, Congress must grant China permanent normal trade relations status. The House of Representatives passed the bill in late May. The Senate is expected to vote on the bill early this month, and it is expected to pass without heavy opposition. There is no doubt as to President Clinton’s position on the measure – he will sign it.

Once Congress grants PNTR to China, the United States will be able to take advantage of the bilateral trade agreement that it signed with China in advance of that country’s inclusion into the World Trade Organization. China is expected to become a WTO member early next year.

“We are working to do everything we need to make sure we are ready to reap the benefits upon China’s inclusion into the WTO,” says Nick Giordano, trade counsel for NPPC.

The United States’ agreement with China states that China will accept pork from any U.S. packing/processing plant that has USDA approval. In addition, China will begin phasing out tariffs, subsidies and other trade barriers.

Another major obstacle facing U.S. pork is cultural. Most pork in China is sold fresh, often at ‘wet markets. These amount to product stands set up on the streets. The poor refrigeration infrastructure is a primary reason for this, and it will be a sizable hurdle to clear.

The United States cannot ship fresh pork to China, so the country’s refrigeration must improve. Because of poor refrigeration, some Chinese have carried a mistrust of chilled and frozen product. But a growing part of the population is starting to shop at supermarkets that carry chilled and frozen products, says Hayes. And as the country’s economy grows, so will this aspect of the population’s purchasing trends.

At the outset of trading, the United States will ship pork variety meats, along with a small percentage of product for foodservice, processing and retail use.

In fact, the first-ever U.S. pork shipments to China were sent through legal channels this past April.

U.S. pork has been making inroads to the Chinese market for several years through the black market. Hayes admits $2 to $3 per head of the value that would be added to U.S. hogs by Chinese variety meat sales has probably already been realized.

The trading progress that has already been made is a positive step toward the lucrative Chinese market, but no one is expecting it to be an easy nor swift journey.

“It’s going to happen over time,” says Giordano. “It’s possible that we will see a big spurt next year, but it’s more likely to surface as a continued upward movement in exports.”

“We’re using a real building-block approach,” adds Cravens. “What’s most important is that the export potential exists. We are working to get Chinese importers to purchase their first U.S.pork and then build on that.”

Opening the Chinese market will not be the single factor to save the U.S. pork industry. The refrigeration infrastructure and still low standard of living will continue to challenge U.S. pork export prospects. At the same time, the population and per capita pork consumption are an enticing package, and the United States has certainly come a long way in its relations with China.

“China is in transition,” says Giordano. “Just 30 years ago China was completely closed off. It’s a different China now.”