Capital Update – For the Week Ending April 28, 2023
In this week’s National Pork Producers Council (NPPC) Friday recap: ag groups want research funding in 2023 Farm Bill, Philippines explores FTA with United States, USDA forecasts small upticks in pork production and exports and West Coast Port labor talks continue. Take a deeper dive below.
Ag Groups Want Research Funding in 2023 Farm Bill
What happened: NPPC this week signed onto a letter to the Chairmen and ranking members of the Senate and House Agriculture Committees, asking that the 2023 Farm Bill include $5 billion in mandatory funding for agricultural research, education, extension and innovation.
Hundreds of national, regional and state agricultural organizations joined in the request, pointing out that such an investment “would advance the critical work being done at public colleges of agriculture, veterinarian, forestry and natural resources across the country. Updated [research] facilities would support American jobs, enable the recruitment of diverse workforce talent, address agricultural production challenges and ensure U.S. leadership in food and agricultural innovation.”
Also, this week, the House Committee on Agriculture held a farm bill listening session in Florida to hear from farmers in the southeast about their concerns and what they would like to see in the next five-year agricultural blueprint. Many farmers asked lawmakers to address challenges such as rising input costs, unfair trade practices and a lack of labor.
Additionally, the Agriculture Committee’s Subcommittee on General Farm Commodities, Risk Management, and Credit had a hearing Wednesday to consider producers’ perspectives on the 2023 Farm Bill.
Why it is important: The five-year farm bill authorizes various agricultural programs and sets farm, conservation, forestry and nutrition policy. The research title of the bill funds land-grant colleges of agriculture and the critical research they conduct, which helps ensure that the United States remains globally competitive.
NPPC’s position: In addition to requesting funds for ag research, NPPC is urging congressional lawmakers to include provisions in the 2023 Farm Bill that prevent and prepare for foreign animal diseases, fund the Market Access and Foreign Market Development export promotion programs and provide an adequate safety net for farmers.
Philippines Open to FTA with United States
What happened: U.S. Trade Representative Ambassador Katherine Tai and Philippines Department of Trade and Industry Secretary Fred Pascual met last week to discuss trade between their countries through existing trade mechanisms. The Philippines and the United States already have a Trade and Investment Framework Agreement (TIFA), and the island nation gets favorable trade treatment under the U.S. Generalized System of Preferences and is part of the Indo-Pacific Economic Framework for Prosperity (IPEF).
The Philippines government is interested in exploring Free Trade Agreement (FTA) negotiations. “With an indication from us that we are willing to explore the possibility of an FTA, we will be able to send a strong signal of our ever-growing alliance to our trade and investment partners,” said Pascual at the meeting in Manila City.
The Biden administration, however, prefers to advance U.S. trade through multilateral pacts such as the IPEF.
“Increasingly, we have been able to show that our practice is benefitting our economy, and we are trying to use this forward movement to innovate a non-traditional trade agreement,” Tai said.
Why it is important: Last year, America’s pork producers shipped more than $133 million of product to the Philippines, making it the number nine market for U.S. pork exports. While that amount was significantly lower than 2021’s record $204 million, it was the second-highest total.
The island nation has been dealing with high food price inflation triggered by outbreaks of African swine fever. In response, NPPC has been working with the U.S. and Philippines governments to provide technical assistance to the Philippine government and its pork producers.
NPPC’s position: Expanded market access for U.S. pork to the Philippines market is a top priority. In May 2021, Manilla temporarily reduced its tariff on U.S. pork imports, dropping the in-quota rate to 15% from 30% and the out-of-quota rate to 25% from 40%. It also raised the quota amount. The Philippines continued those tariff rate reductions twice, most recently extending them through 2023. NPPC is continuing to urge the Biden administration to negotiate comprehensive agreements that include the elimination of tariff and non-tariff barriers to U.S. pork.
USDA Forecasts Small Upticks in Pork Production, Exports
What happened: U.S. pork production for 2023 is forecast to be 1% higher than last year at 12.4 million metric tons (MT), according to the U.S. Department of Agriculture’s annual Livestock and Poultry: World Markets and Trade report issued this week. USDA also estimates U.S. pork exports will increase slightly in 2023 over 2022, with small increases to China, Japan and South Korea because of rising U.S. competitiveness and declining exports from the European Union (EU).
Compared with world markets, the United States in 2023 is expected to rank third in pork production behind China (projected to produce 55.5 million MT) and the EU (21.75 million MT) and second in exports (2.9 million MT) behind the EU (3.75 million MT).
What it means for producers: The uptick in exports will contribute more to producers’ bottom line. Last year, the U.S. pork industry shipped $7.68 billion of product to foreign destinations, equating to about $61 in value for each hog that was marketed in 2022. U.S. producers are dependent on exports, which in 2022 represented over 23% of total pork production. To grow exports, NPPC continues to make opening new and expanding existing markets for U.S. pork a top priority.
West Coast Dockworkers, Port Operators Continue Labor Talks
What happened: Last Thursday, Dockworkers atWest Coast ports reached a tentative deal with port facilities operators over the use of automated equipment at terminals but still do not have a new labor agreement. Previously, the International Longshore and Warehouse Union (ILWU), representing more than 22,000 dockworkers at ports from California to Washington, and the Pacific Maritime Association (PMA), representing facilities operators, agreed on healthcare benefits.
Members of the ILWU have been working without a contract for more than nine months and talks between the union and the PMA have gone on for nearly a year. Recently, dockworkers at the California ports of Los Angeles and Long Beach have staged job actions disrupting cargo from moving through the facilities, including perishable agricultural commodities.
Why it matters: China, Japan and South Korea are three of the U.S. pork industry’s top export markets. About 60% of U.S. pork exports are transported by ocean freight, with the vast majority going from West Coast ports to Asia.
Port disruptions, including dockworker strikes and work slowdowns, can jeopardize the delivery of perishable commodities, costing agricultural producers millions of dollars and, potentially, foreign customers.
NPPC’s take: In late March, NPPC joined 114 other agriculture and business organizations on a letter sent to President Biden, urging the White House to intervene in the ongoing West Coast port labor negotiations. NPPC wants to avoid port disruptions such as those from late 2014 into early 2015 at West Coast ports that negatively affected pork exports. Work slowdowns at the ports from San Diego to Seattle cost the U.S. meat industry millions of dollars in lost export sales.
The U.S. pork industry depends on exports, which account for about a quarter of all sales annually and contribute significantly to every producer’s bottom line.