Trade spat could elevate pork prices
Long-term effects could be modest: OECD, FAO
Chinese consumers could face significantly higher pork prices in the medium term after China slapped more import tariffs on US agricultural products in its trade dispute with the US, the Organisation for Economic Cooperation and Development (OECD) and the UN’s Food and Agriculture Organization (FAO) said.
China said on Friday it would impose an extra 25 percent import duty on more than 500 types of US goods, including soybeans. This was in response to the Trump administration’s plan to put duties on $34 billion worth of Chinese goods.
China, the world’s largest pork producer and importer, relies heavily on soybean meal to feed pigs, said the OECD and FAO in their joint Agricultural Outlook for 2018-27.
“Over the medium term, higher tariffs and hence higher costs for soybeans and feed grains would raise the costs of production for China’s pig meat industry,” they said.
“This, combined with the higher tariffs and hence higher prices for imported pork, could lead to noticeable increases in domestic pork prices.”
But the long-term market effects of the US-China trade dispute should be modest as China can potentially source its farm products from other countries and regions while the US has the potential to supply other markets, the OECD and FAO said.
China imposed a 25 percent duty on US pork items in April in response to US tariffs on Chinese steel and aluminum products and in June also included pork in the second round of tariffs to be imposed on Friday.
The OECD and FAO said China could decide to source its pork needs from alternative suppliers such as the EU, Canada and Brazil, echoing US pork producers’ fears.
In 2017, China produced more than 53 million tons of pork, about 45 percent of global production, and imported an estimated 1.6 million tons, the OECD and FAO said.
In the same year, China imported an estimated 96 million tons of soybeans, accounting for 64 percent of global soybean imports, while it produced around 13 million tons.