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CME: FTAs Should Increase Beef & Pork Exports

by 5m Editor
5 October 2011, at 9:17am

US - Free-trade agreements (FTAs) with South Korea, Panama and Colombia have finally been submitted by the Obama administration to Congress for ratification, write Steve Meyer and Len Steiner.

The agreements with Panama and Colombia were finalised over three years ago but have been awaiting action by the president before being acted upon by Congress.

The primary hold-up for the three agreements, though, has been opposition by US labour unions to the agreement with Korea which is seen as a formidable competitor to the US auto industry.

These agreements are very important to US agriculture in general and the US beef and pork sectors in particular.

According to a press release from the US Meat Export Federation (SUMEF), USDA has estimated that the agreements with Korea, Panama and Colombia would increase US agricultural exports by $1.9 billion,$371 million and $46 million annually.

Dr Dermot Hayes of Iowa State University has estimated that the US - South Korea agreement would push US beef exports to over $1 billion per year when it is fully implemented in 2026. That figure is nearly double the level of 2010 beef exports to Korea.

Dr Hayes predicts pork exports to Korea would double in just five years. The Panama and Colombia agreements will add $25 million to pork exports and $35 million to beef exports by 2016.

Historical annual data for beef and pork exports appear in the charts below. Note that in both charts that right-hand axis represents South Korea and the left-hand axis represent Panama and Colombia. The 2011 observations are based on January-July 2011 year-on-year growth rates for all three countries.

These are obviously important agreements at a time when demand for US meats and livestock are in a somewhat precarious position given the state of the US economy.

The expansion of exports to Korea this year in the wake of their foot and mouth disease outbreak last spring should have laid the groundwork for business relationships that will be critical to the US exporters’ capitalising on these opportunities.

Getting the agreements finalised and ratified has become even more important with the recent enactment of FTAs by the EU with Korea and Canada with Colombia.

A decision handed down by a Texas judge yesterday held that Pilgrim’s Pride violated the Packers and Stockyards Act when it closed an Arkansas plant in 2008.

The judge awarded $26 million to chicken growers but apparently pointed out that a reason for his finding was that Pilgrim’s “manipulated chicken prices.“

That is a bit confusing since chicken prices in no way impact contract growers. We have not seen a copy of the judgment yet — more on this later.

Further Reading

- Go to our previous news item on this story by clicking here.