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Livestock Industries Want USMCA Passage

7/17/2019 - 12:09:00

By Todd Neeley
DTN Staff Reporter

OMAHA (DTN) -- Representatives from a cross section of livestock industries told members of a House Agriculture subcommittee on Tuesday their livelihoods depend on federal efforts to expand trade.

The panelists took the occasion to press House members to approve the United States-Mexico-Canada Agreement (USMCA) as soon as possible.

U.S. Trade Representative Robert Lighthizer is scheduled to meet with Democratic lawmakers sometime this week to talk about some environmental issues related to the USMCA, while President Donald Trump continues to publicly pressure the House to pass the agreement already approved by Mexico four weeks ago.

Rep. Ron Estes, R-Kan., wrote in an opinion published in The Hill on Monday, he believes the USMCA would pass "overwhelmingly" if brought up for a vote in the House.

Click here to read the opinion: https://thehill.com/…

David Herring, president of the National Pork Producers Council, told lawmakers during a hearing Tuesday before the Subcommittee on Livestock and Foreign Agriculture, recent trade disputes with China and other nations have hurt the pork industry.

"Market analysts projected 2018 to be a profitable year for U.S. hog farmers," the Lillington, North Carolina, hog farmer told the subcommittee.

"Unfortunately, restricted market access from trade disputes caused a loss last year to our farmers. This year, the average hog farmer is making a very small profit through the first six months of the year. Those small profits would be much higher were it not for trade retaliation from China and other markets."

Herring said the U.S. pork industry has been on three trade retaliation lists during the past year in China and Mexico. The Mexican government lifted tariffs on U.S. pork but China's 50% tariff in addition to the existing 12% duty on U.S. pork remains in place.

"China is the largest producer, consumer and importer of pork in the world but, at a 62% tariff rate, U.S. pork producers are losing $8 per animal, or $1 billion on an annualized, industry-wide basis because of the punitive tariffs it faces," Herring said.

"There is an unprecedented sales opportunity for U.S. pork producers in China as it continues to battle the spread of African swine fever and experiences a major reduction in domestic production. Were it not for the retaliatory duties on U.S. pork, we would be in an ideal position to meet China's need for increased pork imports and single-handedly put a huge dent in the U.S. trade imbalance with China."

Herring said pork producers are "eager to see ratification" of USMCA because it preserves zero-tariff pork trade in North America.

BEEF CONCERNS

Kelley Sullivan Georgiades, a fourth-generation cattle producer from Crockett and Navasota, Texas, where she owns and operates Santa Rosa Ranch, told the subcommittee USMCA passage would provide a boost to the cattle industry.

A premium received for U.S. beef products from foreign customers, she said, increases the value of each animal sold in the U.S. by nearly $300.

"We would like to see that value increase because, for many cattle producers, that $300 per animal may already be the difference between a successful business and bankruptcy," Georgiades said. "It cannot shrink. We are a low-margin industry."

Mexico and Canada buy a combined $2 billion in U.S. beef products every year. That amounts to nearly 25% of all U.S. beef exports annually and accounts for $69 of those $300 realized by U.S. producers as a result of trade, she said.

"USMCA keeps the good aspects of NAFTA (North American Free Trade Agreement) -- unrestricted, duty-free access for U.S. beef and cattle -- and does not attempt to incorporate failed policies from the past, like mandatory country of origin labeling," Georgiades said. Failing to maintain free trade with Mexico and Canada would be "devastating to cattle producers," she said.

The same could be said for beef trade with Japan, she said, where the U.S. industry already faces a 38.5% tariff.

"Though Japan is still the number one destination for U.S. beef, the lower tariffs available to countries like Australia may soon begin to hamper our growth in Japan if we don't act quickly," Georgiades said.

Because 96% of the world's consumers live outside of the U.S., Georgiades said, "These customers have become a necessary part of the industry."

In 2018 the U.S. beef industry sold more than $8.3 billion in beef products abroad. Foreign consumers typically demand beef cuts that are not in high demand in the domestic market.

"If you go to a steakhouse in the United States, it is doubtful that you will find beef tongue listed among the ribeyes and other top beef cuts," she said. "Yet, in those countries who are our largest export markets, such as Japan, South Korea, Mexico, Canada and Hong Kong, beef tongue and other beef varietal cuts are a delicacy and fetch a premium price."

POULTRY URGES PASSAGE

Holly Porter, executive director of Delmarva Poultry Industry, Inc., a 1,700-member trade association that represents family farmers, processors and allied businesses in the Delmarva Peninsula, said the USMCA is important to her producers.

Several Delmarva companies export dark meat and chicken paws. Overall, the U.S. exported about 17% of its production in 2018, or 7 billion pounds of chicken meat. The U.S. is second in broiler exports behind Brazil.

"Mexico and Canada are our top two export markets, with a combined value of over $850 million in 2018," Porter said.

"The passage of United States-Mexico-Canada Agreement is absolutely critical to the chicken industry not only in protecting the current marketplace but growing it. We call on Congress to vote on USMCA as soon as possible."

House Ag Committee ranking member Rep. K. Michael Conaway, R-Texas, said the livestock and poultry industries need the USMCA.

"As we heard again today, producers are clamoring for the additional certainty, benefits of increased access and added protections that USMCA promises with two of our most important trading partners," he said in a statement following the hearing.

"I again urge my colleagues across the aisle to join me in committing to working together to approve USMCA."

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @toddneeleyDTN

(BAS/CZ)

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