April 11, 2000

Hog producers will earn $5 more per hog when the U.S. – China trade agreement is fully implemented, but American consumers will not see the price of meat rise, a prominent agribusiness economist recently predicted.

In recent testimony before the Senate Finance Committee, agribusiness economist Dermott Hayes of Iowa State University said demand for pork by 1.2 billion Chinese consumers could easily boost the value of hogs by $5 per head. That is good news for hog producers, who suffered through historically low prices in 1998 and 1999.

"I have calculated that the Chinese market, if fully opened to U.S. pork variety meats, would add about $5 per head to each of the 100 million hogs that we slaughter each year, " Hayes said.

Hayes added that because Chinese consumers prefer different cuts of meat, increased hog exports to China would not raise domestic prices for the American Consumer.

"One of the most striking things about Chinese consumption habits is that the parts of the animal least favored by U.S. consumers are those which are most in demand by Chinese consumers," Hayes said. "This is why most of the pork and beef imports smuggled into China today are feet, stomachs, kidneys, hearts, tongues, ears and bungs. The important point here is that the U.S. can add value to existing animal carcasses without increasing muscle meat prices for the U.S. consumer."

National Pork Council (NPPC) President Craig Jarolimek said Hayes’ analysis demonstrates that vast opportunities await American pork producers in China.

"The work by Mr. Hayes and other analysts underscore the importance of Congress passing Permanent Normal Trade Relations (PNTR) status for China," Jarolimek said. "China will become a WTO member with or without U.S. support, but unless congress votes yes on PNTR, pork producers in Denmark, France, and Canada will take advantage of reduced tariffs that won’t be available to American producers," Jarolimek said. It would be ironic and shameful to see American producers locked out of a market American negotiators had opened so skillfully."

Under the U.S. – China WTO agreement, tariffs on frozen pork variety meats and frozen pork muscle meats, will be phased down to 12 percent over a four year period once China becomes a WTO member. At the start of WTO negotiations, China’s tariffs on imported pork were as high as 43 percent.

The U.S. extends Normal Trade Relations to all but six nations, and more than 100 nations receive preferential U.S. tariff treatment more favorable than NTR.

NPPC co-chairs the Agriculture Coalition for U.S.-China Trade, an organization comprised of 75 agriculture-related groups dedicated to ensuring open trade with China.

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