Pork, beef com­pa­nies wary of tar­iffs

China Daily (Latin America Weekly) - - Business - By MAY ZHOU in Hous­ton mayzhou@chi­nadai­lyusa.com

The pos­si­bil­ity that the Chi­nese gov­ern­ment might im­pose 25 per­cent tar­iffs on US pork ex­ported to China is def­i­nitely bad news for North Carolina-based Prestage Farms.

The fam­ily-owned tur­key and pork com­pany broke ground in spring 2017 in Ea­gle Grove, Iowa, to con­struct a pork pro­cess­ing plant in an­tic­i­pa­tion of ex­port­ing prod­uct to China.

The project is ex­pected to be com­pleted in the fall of this year with the hir­ing of 900 em­ploy­ees. The com­pany is cur­rently tak­ing ap­pli­ca­tions to pre­pare for the plant’s op­er­a­tion in about six months.

“We are build­ing that plant with the in­tent to be el­i­gi­ble to ex­port to China. We cer­tainly are pri­or­i­tiz­ing the de­sign of the plant to be able to meet the re­quire­ments of China,” Ron Prestage, pres­i­dent of Prestage Farms, told China Daily.

Prestage said the com­pany’s CEO was in China last week talk­ing to var­i­ous dis­trib­u­tors in China.

“The [Chi­nese] dis­trib­u­tors were very in­ter­ested be­cause they know we are build­ing the most mod­ern plant in the US with in­ter­est to sell in China. They were very pos­i­tive and hope to buy US pork from Prestage,” he said.

“This is not an is­sue be­tween US pork pro­duc­er­spro­ces­sors and im­porter­sre­tail­ers in China. The prob­lem is among the politi­cians. We are de­liv­er­ing a very clear mes­sage to our gov­ern­ment that they re­solve the is­sues and keep the mar­ket open,” Prestage added.

Prestage is hope­ful that the is­sue will be re­solved. “I think Pres­i­dent Trump is the kind of leader who makes bold state­ments to get ev­ery­body’s at­ten­tion but makes prac­ti­cal de­ci­sions down the road. I hope our govern­ments get those is­sues re­solved,” Prestage said.

In re­sponse to Trump’s sign­ing a mem­o­ran­dum in March that would im­pose tar­iffs on up to $60 bil­lion of im­ported Chi­nese goods, China’s Min­istry of Com­merce re­leased a list of 128 US goods that it would im­pose du­ties on if the two coun­tries fail to reach some agree­ment.

The an­nounce­ment by the Chi­nese gov­ern­ment that pork and pork prod­ucts are on the list for po­ten­tial 25 per­cent tar­iffs has caused great con­cern in the pork in­dus­try due to China’s im­por­tance in the sec­tor.

Ac­cord­ing to the US Meat Ex­port Fed­er­a­tion, China is a key mar­ket for US pork and es­pe­cially for pork va­ri­ety meat. In 2017, the US ex­ported 309,284 met­ric tons of pork and pork va­ri­ety meat to China, val­ued at $663.1 mil­lion. China ac­counted for more than one third of US pork va­ri­ety meat ex­ports last year.

The po­ten­tial pork tar­iffs also have the beef in­dus­try wor­ried.

China lifted a ban on beef ex­ports last year, and beef ex­ports to China have been grow­ing steadily since last fall. By the end of last year, the US ex­ported al­most 3,000 met­ric tons of beef to China with a value of over $30 mil­lion.

In Jan­uary, US beef ex­ports to China reached a monthly high of 803 met­ric tons, val­ued at $7.44 mil­lion.

Pete Bonds, a rancher in Sag­i­naw, Texas, runs sev­eral thou­sand calves in a China pro­gram on his ranch.

“My con­cern is that if China puts a tar­iff on pork, it may de­crease our abil­ity to ex­port pork to China. If that hap­pens, we got more pork in the States we have to eat. That will com­pete with beef. That will lower the price of beef,” said Bonds.

“Right now beef is a lux­ury item in China,” said Bonds. “If you add 10 or 20 per­cent to the price of the pork that goes to the com­mon peo­ple, we will be af­fected.”

PRO­VIDED TO CHINA DAILY

A host­ess holds a tray of sliced US beef at an event to cel­e­brate its rein­tro­duc­tion to China in Bei­jing.

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