Repeat of last years record-breaking meat exports unlikely

Oct 23, 2009
by DTN

U.S. meat exporters are suffering from trade conflicts between the U.S. and China, so hopes for resolutions are high as Obama cabinet officials travel to China later this month for an annual trade meeting.

USDA Secretary Tom Vilsack, U.S. Commerce Secretary Gary Locke, and U.S. Trade Representative Ron Kirk will attend the U.S.- China Joint Commission on Commerce and Trade meeting on Oct. 28-29 in Hangzhou, China.

The latest, and perhaps most profit-crushing, agricultural barrier thrown up this year by China is a ban on U.S. pork, but China also bans U.S. beef and has done so for years. In addition, China continues to threaten U.S. chicken exports in a complicated feud with the U.S.

Last year, the U.S. exported a record-high $690 million worth of pork to China, including Hong Kong, National Pork Producers Council (NPPC) Vice President Nick Giordano told Dow Jones in an interview. The export total this year, though, will be “way down,” he said.

China banned U.S. pork earlier this year after the H1N1 influenza, also known as swine flu, was discovered in the U.S. Even though U.S. government and international health officials have said the H1N1 virus cannot be transmitted via pork, China continues to uphold the ban while it does its own risk assessments.

Joe Schuele, director of communications for the U.S. Meat Export Federation (USMEF), said there was no expectation for a repeat of last year’s record-breaking pork exports to China, but the ban is still taking a heavy toll on U.S. trade.

“We expected it to be down, but we didn’t expect to be shut out of the market completely for the last four or five months,” Schuele said. “If we could get China reopened, that would definitely be helpful to our industry.”

But even if the U.S. were to convince China to lift the ban, there are other underlying issues.

In 2007, China decided it would no longer accept pork from swine treated with ractopamine, a drug often fed to U.S. pigs to produce lean muscle in the animals.

While that didn’t stop U.S. pork exports from reaching an all-time high in 2008, it still curtailed commerce and the restriction needs to be removed, NPPC’s Giordano said. “In an open trade scenario, the U.S. pork industry could single-handedly put a huge dent in the U.S.-China trade imbalance.”

The Chinese pork ban is also hurting pork producers’ ability to sell hog intestines, a commodity with only a small domestic market. That’s also taking a toll on U.S. sausage makers, many of whom rely on China to process those intestines into the casings used to make the sausages.

China has tentatively agreed to allow the intestines-casings trade to resume, U.S. meat industry representatives said, but only if the containers used to ship the U.S.-origin intestines are sterilized.

“The U.S. government and China went round and round over where [the sterilization] should be done, who should pay for it, and as far as we’re concerned, we don’t care if it’s done in the U.S. or it’s done in China,” said John Reddington, a vice president for the American Meat Institute (AMI). “We need to get that moving because we’ve got companies here [and] most of their profits ... come from the production of sausage. Without the casings, they can’t make the sausages.”

“In an open trade scenario, the U.S. pork industry could single-handedly put a huge dent in the U.S.- China trade imbalance.”

Last year, China imported 18,355 metric tons of intestines from the U.S., valued at $65.3 million dollars, based on USMEF data. Still no U.S. beef for China China, like most importing countries, banned U.S. beef in December 2003 after the first case of bovine spongiform encephalopathy was found in the U.S. Unlike most other importing countries, China still imports no U.S. beef five years later.

Before the 2003 ban, China was not a huge beef importer, but sales were growing and industry representatives said they saw great potential. The U.S. exported 12,422 metric tons of beef to China, worth $28.4 million in 2003 before the ban, according to USDA data.

The challenge for U.S. negotiators in China later this month will be to pick up where the George W. Bush administration left off and accomplish what it did not. In June 2006, China offered to open its market partially to U.S. beef, accepting only boneless products subject to complicated restrictions. The Bush administration declined the offer and then China offered a similar deal in August 2007, which was also rejected. Chicken imports as olive branch Throughout 2008 and 2009, U.S. lawmakers concerned about sanitary conditions in Chinese chicken processing plants stopped USDA from implementing a plan to allow China to export to the U.S. That prohibition will be lifted this year, according to U.S. lawmakers and Obama administration officials, but it may make little difference in China’s attitude toward its barriers to U.S. meat, U.S. industry officials said.

As evidence, AMI’s Reddington pointed to China’s decision to investigate antidumping charges against the U.S. chicken industry. That decision to investigate was announced on Sept. 26, just hours after the announcement that Congress would allow USDA to permit the importation of processed chicken from China.

The U.S. exported 436,544 tons of chicken, worth $376 million, to China during the first seven months of 2009, about half of which were chicken feet, according to the National Chicken Council (NCC).

But meat trade negotiations may not just be about chicken, beef and pork when Vilsack arrives in Hangzhou. China’s antidumping complaints are believed by U.S. poultry industry representatives at the NCC to be retaliation for the Obama administration’s decision to place duties on imports of tires from China. — DTN