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Tariffs raise tough questions for pork industry

CNS Canada — Representatives from the two largest pork-exporting states in the U.S. were in Winnipeg Thursday to take in the Manitoba Pork Council’s general meeting.

The delegates, who hailed from Iowa and Minnesota, talked about the various challenges facing their industry.

In 2017, over a quarter of the U.S. pork industry’s C$6.5 billion market was generated by trade.

However, newly-proposed Chinese tariffs on U.S. pork are threatening to curtail what was supposed to be another banner year for pork sales.

Slaughterweight cash hog prices (Iowa/Minnesota) dropped last week according to data from Saskatchewan Agriculture.

Hog prices fell US$4.23 per hundredweight, or eight per cent, to an average of US$48.49/cwt. National pork cutout values in the U.S. also dropped.

Drew Mogler of the Iowa Producers Association said the market doesn’t like the threat the tariffs pose.

“The marketplace is obviously reacting but it’s important for us to take a step back and not overreact,” he said.

A week ago, Mogler added, the U.S. Department of Agriculture released a major hogs and pigs report that showed domestic volumes were about three per cent higher on an annual basis.

The U.S. sold US$1.1 billion worth of pork to China last year, he added. A key feature of that trade was China’s willingness to accept several parts of the pig that other countries ignore such as glands and organs.

“A lot of that stuff doesn’t get sold in the U.S.,” he said.

Before the trade dispute with China, he said, there was a lot of optimism surrounding the pork industry. He points out the recent construction of new facilities in the U.S. as a prime example of this.

“The new Sioux City plant is slaughtering 9,000 pigs a day and looking to add a second shift; another plant in Minnesota is processing 4,000 pigs a day,” he explained.

Closer to home, questions are being raised by Manitoba producers about what effects the tariffs may pose for the Canadian industry.

“Where will the Americans put the pork they usually ship to China?” asked Andrew Dickson of the Manitoba Pork Council. It was conceivable some of it could wind up in the Canadian market as U.S. pork production is rising, he added.

“This is an industry that doesn’t like uncertainty, we only have 90 days of cold storage so we can’t afford to park product.”

— Dave Sims writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting. Follow CNS Canada at @CNSCanada on Twitter.

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