SD Pork Producers talk trade, growth and government shutdown
SIOUX FALLS, S.D. — 2018 was a challenging year for pork producers on the trade front, but they're hoping for a better year in 2019.
Trade, the government shutdown and continued expansion in the industry were top of mind with producers attending the 50th annual South Dakota Pork Producers Council Pork Congress and Trade Show in Sioux Falls on Jan. 9-10.
Earlier in the week, United States and Chinese negotiators were in Beijing for mid-level trade meetings to try to resolve the trade war between the two countries. The meetings held January 7-9 concluded with some progress and a commitment from China that they would be making substantial purchases of U.S. agriculture and energy products. However, just like after the G20 Summit, there was no amount or timeline established. Talk also circulated during the week about the Chinese buying another 2 million metric tons of soybeans, plus corn, wheat and pork. There was no way to confirm that business though with USDA export reports not being released because of the government shutdown.
Craig Andersen, who serves on the National Pork Producers Council as well as at the state level, says they are cautiously optimistic about reaching a deal with China before the March 1 deadline, especially after the three days of meetings.
"It sounded real positive. This is the best it has sounded for a few months now. So we are hopeful that things are going to be able to progress and stay going in a positive direction," he says.
Andersen says the National Pork Producers Council is also expecting some Chinese pork purchases in light of the decreased swine production in China tied to the spread of African swine fever.
"We're sure anticipating that they're going to. It might not be quite as fast as what we would like it to be, but I think anything would be a step in the right direction," he says.
Despite the headwinds of tariffs on U.S. pork exports from China and the U.S.'s top export customer Mexico, export volume was solid in 2018.
"Pork exports to our major markets actually held pretty steady. A large part of that was the fact that South Korea really stepped into the gap and bought a lot of pork due to the Free Trade Agreement we have in place," National Pork Board CEO Bill Even says.
However, he says the bad news is the value of those pork exports were lower.
Pork producers were also discussing the impact of the government shutdown on their industry. Andersen says services such as federal meat inspection remain in place because they are essential and meat is a perishable product.
"Basically for like the Food Safety Inspection Services, that hasn't been shut down so we still have a good, safe food supply, and then the Mandatory Price Reporting has continued on," he says.
In addition, he says USDA is still purchasing pork product under the administration's trade assistance program.
U.S. Secretary of Agriculture Sonny Perdue tweeted on Jan. 11, "USDA Food Safety inspectors are still at work, checking meat, poultry and processed eggs. Inspectors are also screening for pests at export and import points."
However, there were still concerns among producers about the enhanced efforts to prevent the African swine fever in China from being brought into the U.S.
"That's our first line of defense for keeping things out and so we don't want to have anything slip through and so that is one of the primary things the government needs to keep up and running," Andersen says.
The other impact of the government shutdown included the closing of Farm Service Agency offices on Jan. 4. That has prevented some pork producers from getting their second Market Facilitation Program payment of $8 per hog.
The bright spot was the excitement surrounding the expansion in the pork industry in South Dakota and region. South Dakota Pork Producers President Ferlyn Hofer says it was evident in the sold-out trade show at the convention and the pork production trends.
"We are really excited because for 2018 the hog inventory was up 12 percent over the previous year," he says.
Hofer attributes that to the growth in the pork processing industry with the new Seaboard Triumph plant in Sioux City and Smithfield Food's expansion in Sioux Falls. He says there are also more young people getting into the business by putting up finishing barns and contracting directly with a packer.
"So it's an exciting time to be in pork production," he says.