During an economic outlook on pork production during World Pork Expo 2022 in Des Moines, IA, on Tuesday, Dr. Dermot Hayes, professor and Pioneer Chair in Agribusiness in the School of Economics at Iowa State University, said export news for U.S pork isn't good right now, but there's hope for improvement.
Hayes said there are myriad reasons for pork export numbers going down.
"Part of it is we're not producing a lot of pigs, so there's less to export," he noted. "Part of it is China's rebuilding, so they're not importing as much."
Hayes also noted a 25% duty on U.S. pork that has to compete with EU pork that has no duties. This eats into U.S. export numbers.
Hope at the end of the tunnel
Speaking of Europe, Hayes noted that the EU is currently producing more and consuming less pork, which is hurting U.S. exports that are pricier.
There is a "farm-to-fork" trend happening in the EU that may help the U.S. in the long run.
"It seems Europe doesn't want to export pork anymore," said Hayes. "Europe has decided that exporting pork is a bad thing. Less exporting will reduce your carbon footprint and reduce environmental damage to your land."
While China is rebuilding its herd, they are also contending with rising production prices.
"If Chinese pork producers were more optimistic, they would pay more for sows and piglets, and they're not doing that," said Hayes. "In fact, more recently it's been trailing off again."
U.S. is efficient at producing pork
While export numbers have dropped off, the fact is the U.S. is very efficient at producing pigs, so he sees the numbers moving back up.
"We are a very much a low cost producer," said Hayes. "The U.S. is more efficient than many other countries. Utilities are less here. Construction costs are less here. Our labor issues are minor compared to some of the other countries. We make far better use of our labor. It's just an efficient economy that produces a commodity product at a lower price."
The bottom line
Hayes summarized his economic outlook with this thought: "If China was to lower production, and I think they will, and if Europe continues to cut production and exports, and I think they will, then our exports should come roaring back."
Hayes provided this summarized bottom line:
- The U.S. has temporarily lost is competitive position in world pork markets
- Fewer pigs are coming to market in the U.S. and there is less available to export
- A collapse of Chinese imports has created a surge in EU exports to other countries
- EU and Chinese pork producers are losing money and are reducing production
- There is still room for optimism for U.S. exports because the U.S. is a low-cost producer
According to the U.S. Pork Checkoff, the U.S. produces 12% of the world’s pork. In 2021, U.S. pork exports surpassed $8.1 billion in value. In total, more than 6.4 billion pounds of pork was exported to other markets. In 2021, export value averaged $62.86 for every U.S. hog marketed. The top three U.S. pork customers are Mexico, China and Japan.
