It’s no exaggeration to say that the U.S. pork industry’s future hinges on the export market. Why? In recent years, pork exports have claimed 17 percent to more than 20 percent of the industry’s annual production; this year’s estimate is 22 percent.
The U.S. population grows 1 percent, maybe 2 percent a year. With the aging Baby Boomers and fickle consumers that tend to chase dietary claims, there are limits to expanding domestic pork consumption. Sure, it can be done but not by 22 percent.
Most of the world’s consumers reside outside of the United States; and pork is the No. 1 most-consumed meat in the world. As incomes in many parts of the globe rise, those consumers tend to upgrade their diets, and that includes adding more protein. Even with the recent dramatic rally in feed grain prices, the United States is the world’s lowest cost pork producer. What’s more, it has the capacity, ability and desire to supply more pork. Indeed, U.S. pork producers can help feed even more of the world, but those markets have to be open more broadly and fairly.
That’s why you have to see that Congress finalizes the South Korea, Colombia and Panama free-trade agreements. If they are not completed before Congress’ August recess, they will fall into the black hole of the 2012 election season. Bottom line, you cannot afford to let that window close.
The three pending FTAs have tremendous potential for the United States as a whole, but particularly for agriculture. According to the American Farm Bureau Federation, South Korea is America’s fifth largest market for U.S. agricultural exports, equaling $3.9 billion in 2009. The FTA could add another $1.8 billion to that total. As for Colombia, it has been U.S. agriculture’s largest South American customer during the past five years, with exports totaling $4.3 billion. An FTA would add another $815 million annually to the export total. While Panama is the smallest market of the three, the FTA would drop another $195 million per year into U.S. agriculture’s coffers.
As for pork, there are big wins waiting.
• The U.S./South Korea FTA was first signed on June 30, 2007, with some refinements made this past December. In recent months, South Korea trade representatives have made the rounds in Washington and in several states to drum up support.
South Korea has a trillion-dollar economy and 49 million consumers — who love pork. Even with tariffs at 25 percent on frozen pork and 22.5 percent on fresh/chilled pork, the country has purchased 84,000 metric tons from the United States, totaling $183 million. With the FTA, tariffs on all frozen and some processed pork would drop to zero by 2016; fresh/chilled pork would be duty-free after 10 years (with a safeguard).
What’s that mean to you? Dermot Hayes, Iowa State University economist, estimates the South Korea FTA would generate $687 million in U.S. pork exports, create 9,000 pork-sector jobs and add $10 per head to live-hog prices. The country would absorb about 5 percent of annual U.S. pork production.
If Congress continues to sit on its duff, the United States will be out of this market within 10 years, Hayes says. That could cost the U.S. pork sector 3,600 jobs and 18,000 jobs for the United States.
• The Colombia FTA was signed on Nov. 22, 2006. The Colombian House and Senate approved the measure by wide margins in 2007, yet it languishes in the U.S. Congress. Colombian products can enter the United States tariff-free, so one would think Congress would want to level that playing field.
Hayes estimates the Colombian market would generate $69 million in U.S. pork export sales, create 919 more pork-specific jobs and eventually add $1.15 per hog.
• U.S. pork is essentially kept out of Panama by strict quota limits and 80 percent tariffs. The FTA, which has been lying in wait for two years, would reduce and ultimately eliminate U.S. pork tariffs. While not a huge market, Panama would add $16 million to U.S. pork exports and 20 cents per head to live-hog prices. It would also create 213 new pork-sector jobs.
The reality is global trade is not a stagnant nor patient business. Both Canada and the European Union have agreements with Colombia. Panama has signed pacts with Chile and Canada, and is negotiating with the E.U. South Korea has secured or is planning FTAs with Canada, Chile, Australia, New Zealand, the European Union, India, Japan, Mexico, China, Peru and Mercosur (which is Argentina, Brazil, Paraguay and Uruguay).
After every FTA implemented, you have benefited. Since the North American Free-trade Agreement in 1994, and the 1995 Uruguay Round Agreements, U.S. pork exports have skyrocketed by 688 percent in volume and 657 percent in value.
Pork producer representatives have knocked on lawmakers’ doors; the National Pork Producers Council has been intensely diligent; there have been hearings and hours of testimony; and the administration fully supports trade expansion. The hope was that the three FTAs would be packaged and approved together, but word is that’s not going to happen. With all of the other national issues, Congress could continue to avoid action.
You may have already written, e-mailed or called your representative and senator about giving the final blessing to these three FTAs, but plan to do it again and again and again, if needed. You simply cannot afford to let this window close.