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Statement Of the North American Meat Institute On U.S. Meat Supplies and Export Disruptions

Wednesday, July 25, 2018

Attribute Statement to North American Meat Institute President and CEO Barry Carpenter

“We appreciate the Administration’s announcement today that the U.S. Department of Agriculture (USDA) will provide short-term relief to hog and cattle producers who are facing significant economic losses resulting from tariffs imposed by some trading partners. We look forward to the details and the rollout of the program.

The news comes just a day after news reports about the latest cold storage report highlighted the brewing perfect storm of lost markets, increases in pork supplies and rapidly filling cold storage capacity. As key pork plants are set to open or add additional shifts and increase U.S. daily pork slaughter capacity by an estimated 20,000 head, export markets are imposing high tariffs, making U.S. pork largely uncompetitive compared to pork from other exporting nations. According to a U.S. Meat Export Federation (USMEF) analysis, losses to the U.S. pork industry from tariffs imposed by China could result in losses totaling $9 per head or $770 million in the May to December period alone and $1.14 billion in losses for the full year.

In the beef sector, USMEF estimates that export losses to China this year will likely exceed $30 million and could total hundreds of millions over the next several years. Compounding challenges in China are trade tensions with our largest foreign pork customer Mexico. Tariffs imposed by Mexico on U.S. pork will result in $300 million in losses to the pork sector for the remainder of the year, USMEF reports.

The futures markets are hinting at the gloomy outlook for the livestock and agriculture sector. The magnitude of potential losses from markets around the world where U.S. meat products will become far less competitive cost-wise will reach deep into rural America, and livestock producers will likely scale back herds as they face declining, export-linked demand for their livestock.

Once foreign markets are lost to competitors, regaining them is extraordinarily difficult, and that is why it is critical to act now to reverse course. U.S. agriculture is the largest sector of the U.S. economy and meat is the largest sector of agriculture. The ripple effects of these trade disputes on farmers, grain and feed producers, transportation, and local economies is still being quantified, but undoubtedly enormous and far-reaching. It is critical that our government engage in dialogues with our trading partners that can rebuild relationships and restore markets before more permanent damage is done to our vibrant agricultural economy and the people who drive it.”

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