Increased exports of lightweight hogs to Mexico could cause total U.S. live-hog exports to rise by an average of $100 million per year, according to Iowa State economist Dermot Hayes. The projected increase in U.S. live-hog exports is due to May 26 termination of the Mexico's antidumping duty order on U.S. lightweight hog exports.
“Opening the market in Mexico is a big win for U.S. pork producers,” said National Pork Producers Council President Jon Caspers, a pork producer from Swaledale, Iowa. “Most of these lightweights sell at a significant discount in the United States but in Mexico we can sell them at a premium.”
In the late 1990’s, pork industry participants in the U.S. and Mexico realized the potential of selling lightweight U.S. hogs to Mexico because of the growing disparity in slaughter weights between the two countries. The average slaughter-hog weight in the United States is 250 pounds. In Mexico the average slaughter weight is about 200 pounds, Hayes says.
Caspers added that when U.S. lightweight hogs began to flow into Mexico, the country responded by initiating an antidumping case. “Since late 1999, large antidumping duties have shut U.S. producers out of this market,” he said.
“NPPC has worked closely with the U.S. government to fight the antidumping order,” Caspers said. “We persuaded the United States Trade Representative’s Office to hold consultations with Mexico in September 2000. As a result, Mexico agreed to drop its de facto ban on heavyweight live-hog imports from the U.S. and to conduct a Changed Circumstances Review of the antidumping duty order on lightweight hogs.”
The findings of that Changed Circumstances Review resulted in the termination of the antidumping duty order. Checkoff funding was used to research and analyze the situation.
While some heavyweight hogs have moved to Mexico since the lifted, unfounded sanitary barriers have limited the volume of U.S. heavyweight-hog exports. Hayes noted that Mexico still "has much greater potential as a lightweight market.”
He estimates a trade volume of “600,000 head of lightweights within 6 months, eventually increasing to 1 million once the market has fully adjusted.” He says the total benefit to U.S. producers could be “$16 per lightweight hog exported, or $16 million in total additional profits to U.S. pork producers.” According to Hayes, this will result in an average increase in the value of U.S. live-hog exports of about $100 million annually.
Caspers cautions that while terminating the Mexican antidumping duty order on lightweights is positive, NPPC continues to be extremely concerned about the ongoing Mexican antidumping investigation of U.S. pork exports. “The average U.S. pork producer lost money for 18 straight months, and we simply can not have any restriction on our pork exports to Mexico,” he said.
National Pork Producers Council