Trade tensions between the U.S. and China should be filtering down to pork producers, but another development is easing the blow while injecting uncertainty into the industry.
China slapped tariffs of 50 percent on American pig products, curtailing U.S. access to the worlds largest market for pork consumption. But wholesale pork prices continue to rise theyre up 60 percent this year because an outbreak of African swine fever is decimating Chinas own swine population and forcing the company to lean heavily on imports.
By some estimates, Chinas total meat imports increased 90 percent in July, compared to the same period last year. Even if those imports come from countries other than the United States, our domestic producers feel the impact as Chinas appetite for pork drives up prices worldwide.
This is an important development for St. Joseph, where a large portion of the economy is dependent on pork production. Three companies Triumph Foods, Dailys Premium Meats and Tyson Foods employ more than 3,500 people in various capacities of pork production. Only Triumph, with around 2,900 employees, is a major exporter from St. Joseph, but other Tyson facilities ship pork overseas and all three companies feel the impact of global supply issues.
For all these companies, the African swine fever outbreak could blunt some of the impact of the U.S.-China trade war.
In its most recent earnings report, Tyson executives said the company didnt see an immediate benefit from increased demand in China earlier this year. Thats expected to change, with U.S. Department of Agriculture export data showing accelerating shipments of U.S. pork to China.
Were optimistic this will lead to a positive impact on our pork business, Noel W. White, the company president and chief executive, said in an earnings call with investors. We estimate increased exports of pork to China may happen late in the calendar year.
THE LONGER-TERM issue centers on a need to keep African swine fever out of the United States. A domestic outbreak could cost the U.S. pork industry as much as $8 billion a year, according to the National Pork Board.
No treatment exists for whats known as ASF, but Boehringer Ingelheim is working on a vaccine, the company said on its website. That process could take years, so for now the focus is on monitoring the U.S. hog supply for signs of the disease.
For other parts of the world, the ASF outbreak is an unfortunate development, but U.S. producers are more than capable of meeting the challenge, especially if China drops punitive pork tariffs, as that country promised late last week.
The ASF outbreak shows how much the world, and not just U.S. producers, need a deal to end this trade war.
