Statement of National Pork Producers Council
The National Pork Producers Council is a national association representing 44 affiliated states that annually generate approximately $15 billion in farm gate sales. The U.S. pork industry supports an estimated 550,200 domestic jobs and generates more than $97.4 billion annually in total U.S. economic activity and contributes $34.5 billion to the U.S. gross national product.
Pork is the world’s meat of choice. Pork represents 40 percent of total world meat consumption. (Beef and poultry each represent less than 30 percent of global meat protein intake.) As the world moves from grain based diets to meat based diets, U.S. exports of safe, high-quality and affordable pork will increase because economic and environmental factors dictate that pork be produced largely in grain surplus areas and, for the most part, imported in grain deficit areas. However, the extent of the increase in global pork trade – and the lower consumer prices in importing nations and the higher quality products associated with such trade - will depend substantially on continued agricultural trade liberalization.
PORK PRODUCERS ARE BENEFITING FROM PAST TRADE AGREEMENT
In 2006, the United States exported 1,262,499 metric tons of pork valued at $2.864 billion. This is a 9 percent increase over 2005 exports in volume terms and 8.7 percent in value terms. 2006 was the15th straight year of record pork exports. U.S. exports of pork and pork products have increased by more than 433 percent in volume terms and more than 401 percent in value terms since the implementation of the NAFTA in 1994 and the Uruguay Round Agreement in 1995.
The following 7 export markets in 2005 are all markets in which pork exports have soared because of recent trade agreements.
Mexico
In 2006 U.S. pork exports to Mexico totaled 356,418 metric tons valued at $557,857 million. This is an increase of 8 percent in volume terms and 9 percent in value terms over pork exports to Mexico in 2005. Without the NAFTA, there is no way that U.S. exports of pork and pork products to Mexico could have reached such heights. In 2006, Mexico was the number one volume market and number two value market for U.S. pork exports. U.S. pork exports to Mexico have increased by 274 percent in volume terms and 398 percent in value terms since the implementation of the NAFTA growing from 1993 (the last year before the NAFTA was implemented), when exports to Mexico totaled 95,345 metric tons valued at $112 million.
Japan
Thanks to a bilateral agreement with Japan on pork that became part of the Uruguay Round, U.S. pork exports to Japan have soared. In 2006, U.S. pork exports to Japan reached 337,373 metric tons valued at just over $1 billion. Japan remains the top value foreign market for U.S. pork. U.S. pork exports to Japan have increased by 279 percent in volume terms and by 178 percent in value terms since the implementation of the Uruguay Round.
Canada
U.S. pork exports to Canada have increased by 1,933 percent in volume terms and by 2,689 percent in value terms since the implementation of the U.S. – Canada Free Trade Agreement in 1989. In 2006 U.S. pork exports to Canada increased to 138,564 metric tons valued at $437 million—a 6 percent increase by volume and an 11 percent increase by value over 2005 exports.
China
From 2005 to 2006, U.S. exports of pork and pork products to China increased 13 percent in volume terms, totaling 88,439 metric tons valued at $126 million. U.S. pork exports have exploded because of the increased access resulting from China’s accession to the World Trade Organization. Since China implemented its WTO commitments on pork, U.S. pork exports have increased 53 percent in volume terms and 90 percent in value terms.
Russia
In 2006 U.S. exports of pork and pork products to Russia totaled 82,677 metric tons valued at $164 million—a 105 percent increase in volume terms and 127 percent increase in value terms over 2005 exports. U.S. pork exports to Russia have increased largely due to U.S.-only pork quotas established by Russia as part of its preparation to join the World Trade Organization. The spike in U.S. pork export to Russia in the late 1990s was due to pork shipped as food aid.
Taiwan
In 2006, U.S. exports of pork and pork products to Taiwan totaled 25,198 metric tons valued at $38 million. U.S. pork exports to Taiwan have grown sharply because of the increased access resulting from Taiwan’s accession to the World Trade Organization. Since Taiwan implemented its WTO commitments on pork, U.S. pork exports have increased 99 percent in volume terms and 103 percent in value terms.
Australia
The U.S. pork industry did not gain access to Australia until recently, thanks to the U.S. – Australia FTA. U.S. pork exports to Australia exploded in 2005 making Australia one of the top export destinations for U.S. pork. Even with the disruption caused by a legal case over Australia’s risk assessment of pork imports, U.S. pork exports to Australia in 2006 totaled $62 million—a 480 percent increase over 2004 exports.
Benefits of Expanding U.S. Pork Exports
Prices – The Center for Agriculture and Rural Development (CARD) at Iowa State University has calculated that in 2004, U.S. pork prices were $33.60 per head higher than they would have been in the absence of exports.
Jobs – The USDA has reported that U.S. meat exports have generated 200,000 additional jobs and that this number has increased by 20,000 to 30,000 jobs per year as exports have grown.
Income Multiplier – The USDA has reported that the income multiplier from meat exports is 54 percent greater than the income multiplier from bulk grain exports.
Feed Grain and Soybean Industries — Each hog that is marketed in the United States consumes 12.82 bushels of corn and 183 pounds of soybean meal. With an annual commercial slaughter of 105.3 million animals in 2006, this corresponds to 1.34 billion bushels of corn and 9.63 million tons of soybean meal. Approximately 16 percent of this production is exported, and these exports account for approximately 216 million bushels of corn and 1.54 million tons of soybean meal.
However, as the benefits from the Uruguay Round and NAFTA begin to diminish because the agreements are now fully phased-in, the creation of new export opportunities becomes increasingly important.
Pork Producers Support the Proposed U.S.-Republic of Korea FTA
The Republic of Korea is an important export market for U.S. pork producers. U.S. pork exports to Korea have increased as a result of concessions made by Korea in the Uruguay Round. In 2006 exports climbed to 109,198 metric tons valued at $232 million, an increase of 2,217 percent by volume and 2,606 percent by value since implementation of the Uruguay Round. Exports to the Republic of Korea in 2006 grew aggressively over 2005 exports—52 percent increased in volume terms and a 50 percent increase in value terms. South Korea currently is the 4th largest export market for U.S. pork.
The United States-Republic of Korea free trade negotiations provides U.S. pork producers the opportunity to significantly increase market access in the very lucrative Korean market. U.S. pork and pork products currently face significant tariffs in South Korea. For example, the current South Korean duty on bellies, a high demand pork product, is 25 percent.
On April 1, 2004 the Korea - Chile Free Trade Agreement went into effect. As a result, Chile – a major pork exporter and competitor to the United States – will have duty free access to the Korean pork market by 2014. In 2006, Chile exported 31,203 metric tons of pork valued at $77 million to South Korea. This is an increase of 88 percent in volume terms and 148 percent in value terms over exports in 2003, the year before the Chile - South Korea FTA went into effect. U.S. pork is becoming increasingly disadvantaged as the tariff on Chilean pork is being reduced and will be significantly prejudiced unless there is an ambitious outcome in the U.S.-Korea free trade negotiations. Upon the implementation of a United States-Republic of Korea Free Trade Agreement, all tariffs on U.S. pork and pork products should immediately be zero.
The Republic of Korea should agree in writing to maintain a transparent system for issuing import permits, to recognize the U.S. pork inspection system, and to accept pork from all USDA-approved facilities.
Additionally, the Republic of Korea needs to show flexibility in the country of origin labeling demands it is making of the United States meat industry. The new South Korean country of origin labeling rules require U.S. exporters to include in all packaging material a country of origin label that includes the use of the term “USA” or “U.S.A.”. It would apply to all individually packaged products being exported to South Korea. South Korea has to this point insisted, for no justifiable reason, that it will not accept the “bug” that currently appears on many U.S. packaged meat products which says “U.S. Inspected and Passed by Department of Agriculture”, as an acceptable indication of country of origin. If the new Korean labeling requirements for pork and beef from the United States are implemented unabated, it will raise the cost of doing business and present a bad precedent that could be copied by other trading partners.