​US pork producers cop big trade retaliation costs

Another tariff blow for US pig farmers


Agribusiness
Stock from a United States pig farm in Iowa.

Stock from a United States pig farm in Iowa.

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Mexico's tariffs latest blow.

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UNITED States pork producers are becoming extremely nervous as retaliations against their president’s trade manoeuvres start to pile up among their key global customers.

The latest hit comes from Mexico, which has just levied punitive tariffs – 10 per cent effective immediately, escalating to 20pc next month – on unprocessed pork in response to tariffs on its metal exports to the US.

The move comes hot on the heels of China imposing additional 25pc tariffs on US  pork in April.

Prominent US pig industry consultant Dr Steven Pollmann, speaking in Queensland at the recent Pan Pacific Pork Expo, said industry estimates put the cost to pig farmers of the China fallout at $18 per animal.

The US pork industry has been riding a wave of tremendous growth, fueled in part by increasing exports, and Mexico is the largest market for American pigs, representing nearly 25pc of all US pork.

China is their third-largest market.

The Washington-based National Pork Producers Council says the Mexican tariff eliminates the ability of US farmers to compete effectively in that country.

NPPC president Jim Heimerl, who farms at Johnstown, Ohio, said the pork industry was taking on water fast.

It has been a quick and hard blow for an industry with expansion firmly in its sights and big money already committed to both on-farm and processing expansion.

US pig production consultant Dr Steven Pollmann speaking at a pork conference in Queensland.

US pig production consultant Dr Steven Pollmann speaking at a pork conference in Queensland.

Exports had grown to represent 23pc of total pork produced, from just 1-2pc in the 1970s and a point, not long before, where the US was net importer, Dr Pollmann told Australian pork producers.

“Studies show those exports have equated to an increase of about $50 per pig,” he said.

“The US is a low cost producer, much lower than Europe which is our main competition for the export business.”

Also creating an environment prime for growth was growing meat consumption in the US, which Dr Pollmann said was occurring across all segments except turkey.

This year, a whopping 99 kilograms per person is expected to be consumed and next year that is expected to hit all-time record levels.

In the past three to four years, big increases in slaughter capacity have occurred with four new packing plants constructed plus additional kill space added to existing locations.

“In the fall of 2018, kill capacity will increase by 40,000 pigs per day. Add another year and it increases by another 10,000 pigs per day,” Dr Pollmann reported.

“What that means is we have to bring on another half a million sows to meet that kill capacity.”

Already the country’s 6m sow herd had grown by 250,000 sows last year.

Increased productivity was happening at the same time, Dr Pollmann said.

Slaughter weights are lifting at a rate of .5kg per year, with the average now at 97kg, while back fat levels have not been affected.

Consolidation across the industry was continuing, he said.

The largest five companies have 32pc of the sow total, the largest 40 companies have 67pc and just ten packers process 87pc of pigs.

Dr Pollman said the most important things the US industry had determined make their money were growth rate, livability and numbers weaned per litter.

He offered Australian producers six key tips to improve productivity, as nutted out by the US experience.

Monitor key inputs. Rather than monitoring weekly mortality,  a “rearview only approach”, US producers have converted to a system they call standard site visits, where key lead indicators are identified, such as feed consumption, ventilation functionality, pig treatment and pen usage.

Pay attention to feed processing to get grain particle size and pellet quality spot on.

Increase weaning age. “Our average age is now 20 days and that has improved growth rate and livability,” Dr Pollmann said.

Increase use of wean-to-finish.

Focus on space balance, a function of stocking density.

Employ larger farrowing crates.

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