The trade wars waged by US President Donald Trump are seriously hurting American pig farmers. Now that feed prices are also threatening to rise, the situation remains precarious. "That's right," says Randy Spronk, who has just stepped down as president of the United States pig federation. "But I am hopeful that we will quickly regain our sales markets."
Randy Spronk recently stepped down as president of the United States National Pork Producers Council and co-owns a business of approximately 10.000 sows in Edgerton Minnesota. He runs this together with his son Selt, brother Gorden and their staff. Their company also includes 1.100 hectares of soybeans and corn. Spronk is now administratively active, among other things, as head of the national board for the promotion of pork in and outside the United States. 5 questions for him about the development of the pig sector in the United States and the expectations for the market.
Trump's policies and attitudes have cost American pig farmers a lot of exports. How big is the impact of that?
"Approximately 25% of our pork is exported. However, we currently have problems with the 5 largest buyers: Japan, Mexico, China, Canada and South Korea (together they represent 80% of our export). In fact, that was completely completed last year. Mexico is the second most important export country for pork. In the trade conflict they have introduced a 1% tariff on pork. We estimate that this cost us about $25 per pig. That seems to be coming to be resolved in the fall if Trump signs a new agreement with Mexico and Canada."
"Japan is our main export market. The fact that we no longer participate in the Trans-Pacific Partnership (TPP) costs us a lot of money. We don't know how much, but a few years ago we exported to Japan for $1,7 billion. Now we are losing that market to the Netherlands and Germany, while we have invested here in the United States in recent years to meet the growing demand from Japan.The talks are ongoing between the TPP partners and our country and I am hopeful for a smooth solution. I spoke to the president and also said that restoring trade with Japan is our number 1 priority. Trump really understands the importance for us farmers."
And China?
"China is the third largest export country for our pork. Various calculations show that the import tariffs of up to 60%, which China has imposed on us, cost about $8 per pig. That is also a serious loss. While I hope well for the 4 other important export countries I think we can export more already this calendar year, I don't have that with China. I'm afraid that market will remain closed for us longer and that it will be difficult to regain our positions there after that."
-Randy Spronk
"I am also very curious about how China will restore and restructure the internal market. The serious problems caused by African Swine Fever are partly caused by the fact that the production facilities are close to the cities, while the pigs have to be brought in from far away. The Chinese consumer Those who order fresh pork really want to get their hands on warm meat. Actually, the production facilities should be closer to the large pig farms, further from the city. But then the consumer has to change. They have to accept that the meat is first frozen. The coming years will show how China deals with this and whether the country is able to recover properly."
It must be frustrating that your competitors in Europe, among other places, are taking over your market share?
"I would lie that it is not frustrating that we can export less than we did before. And that while there is a lot of potential. Fortunately, that potential will remain there for a while. Asians will continue to demand pork in the coming years. The same goes for citizens in the United States. Fortunately, the domestic market is now doing quite well, but overproduction is lurking here with most exports disappearing. That is not good for prices and the market. We must therefore give up. The strongest survives. That is how it has always been and will continue to be.
Expect additional pressure on margins due to higher feed prices. After the many floods last spring in the Mid-West, it seems that way?
"Yes, I expect feed prices to rise by 20 to 30 percent in the coming winter due to scarcity. A lot of plots have not even been sown and others will certainly give a significantly lower yield. I am actually surprised that the futures markets are not yet more solid. Even though the ministry officially estimates that the total harvest will not be much lower, nobody actually believes that. I certainly don't."
Your domestic market is still the main buyer of your pigs. Do you also expect more market concepts in the United States in the coming years, comparable to Europe, in which retail and producers work together on more sustainable farming and pay a plus for it?
"Actually, I don't expect that. I am quite skeptical and critical about this. It appears time and again that consumers prefer to buy the cheapest product. And the cheap pork from the United States is also a good and safe product. Developing such market concepts also not so fast here because the majority of the population still has little money on their hands, which is different from Western Europe."
"In addition, I think in principle that we as pig farmers should not be tempted by supermarkets that demand extra effort for a small plus per kilo of meat. In no time you as a farmer have to do even more for the same small plus or stay the requirements are in force, but the plus is decreasing. For our own company we have also had many discussions about this with retailers, but I am holding off. Simply because they do not want to lay down in black and white for several years that we will structurally charge an additional I refuse to do more than the law requires at the risk of not getting paid extra for it. I think such concepts will remain a niche in the United States for years to come."
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