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U.S Live Hog Exports Could Increase By $100 Million A Year

by 5m Editor
5 June 2003, at 12:00am

WASHINGTON, D.C. - Increased exports of lightweight hogs to Mexico could cause total U.S. live hog exports to rise by an average of $100 million per year, according to Iowa State economist Dermot Hayes.

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The projected increase in U.S. live hog exports is due to the termination on May 26 of the antidumping duty order in Mexico on U.S. lightweight hog exports.

"Opening the market in Mexico is a big win for U.S. pork producers," said National Pork Producers Council (NPPC) President Jon Caspers, a pork producer from Swaledale, Iowa. "Most of these lightweights sell at a significant discount in the United States but in Mexico we can sell them at a premium."

According to Hayes, in the late 1990's pork industry participants in both the U.S. and Mexico realized the potential for the sale of lightweight U.S. hogs to Mexico because of the growing disparity in slaughter weights between the two countries. While in the United States, the average slaughter weight of a hog is 250 pounds, in Mexico the average slaughter weight is about 200 pounds, Hayes says.

Caspers added that when U.S. lightweight hogs began to flow into Mexico in the late 1990s, Mexico responded by initiating an antidumping case. "Since late 1999 large antidumping duties have shut U.S. producers out of this market," he said.

"NPPC has worked closely with the U.S. government in fighting the antidumping order," Caspers said. "We persuaded the United States Trade Representative's Office to hold consultations with Mexico in September of 2000. As a result of those consultations Mexico agreed to drop its de facto ban on heavyweight live hog imports from the U.S. and to conduct a Changed Circumstances Review of the antidumping duty order on lightweight hogs."

The findings of that Changed Circumstances Review resulted in the termination of the antidumping duty order on May 26. Checkoff funding was utilized to conduct research and analysis that NPPC relied upon in advancing the interests of producers in advocating the termination of the antidumping duty order.

While some heavyweight hogs have moved to Mexico since the ban was lifted, unfounded sanitary barriers have held down the volume of U.S. heavyweight exports. Notwithstanding the sanitary restrictions on the heavyweights, Hayes noted that "Mexico has much greater potential as a lightweight market."

Hayes estimates a trade volume of "600,000 head of lightweights within 6 months eventually increasing to 1 million once the market has fully adjusted." He calculates the total benefit to U.S. producers between avoiding steep U.S. discounts and attaining the premium in Mexico to be "$16 per lightweight hog exported or $16 million in total additional profits to U.S. pork producers." According to Hayes, this will result in an average increase in the value of U.S. live hog exports of about $100 million per year.

Caspers cautions that while the termination of the Mexican antidumping duty order on lightweights is positive, NPPC continues to be extremely concerned about the ongoing Mexican antidumping investigation of U.S. pork exports. "The average U.S. pork producer lost money for 18 straight months, and we simply can not have any restriction on our pork exports to Mexico," he said.

Source: National Pork Producers Council (NPPC) - 5th June 2003

5m Editor