Source: Lisa M. Keefe, MEATINGPLACE, 11/13/15

The U.S. pork industry is looking solidly profitable and growth-oriented for 2016 as it seems to have put the porcine epidemic diarrhea virus (PEDV) in the rear view mirror, noted Steve Meyer, vice president for pork at EMI Analytics, in a presentation at the North American Meat Institute’s Outlook Conference here last week.

The biggest risk in front of the industry is the threat of retaliatory tariffs by Canada and, especially, Mexico related to the U.S.’s country-of-origin labeling (COOL) law, declared illegal by the World Trade Organization earlier this year.

“Both [countries] have said the only thing that works for them is to repeal [COOL],” Meyer said. “Our Senate needs to act to make sure this doesn’t happen.”

A vote to repeal the COOL legislation passed the House last summer. The Senate has yet to take a vote. Meanwhile, the WTO's arbitration panel is expected to rule on Canada's and Mexico's proposed laundry list of retaliatory tariffs against U.S. goods in early December.

The threat of retaliation by Mexico is potentially more damaging than what Canada has vowed to enact, Meyer said, primarily because Canada is itself a large exporter of pork. Mexico, however, is the U.S.’s No. 1 pork export market. Although Mexico has not publicized its retaliatory tariff targets, as Canada has done, the danger to the U.S. pork industry is greater from the south.
“Those Mexican tariffs will be really painful,” Meyer said.

Otherwise, the pork industry looks poised for solid — but not too rapid — growth in 2016. Meyer expected hog slaughter for the fourth quarter to be up 5.8 percent year-over-year, although a drop in carcass weights will mediate the increase somewhat.
Production in the first half of 2016 is expected to be “virtually even” with 2015, with some year-over-year growth expected in the third quarter of 2016. For the fourth quarter of next year, Meyer thinks growth could be about 3 percent.

Packer capacity is not an issue in the pork industry as it is for the beef industry, Meyer said.

For more stories, go to www.meatingplace.com.