Iowa Pork Industry Innovates in Effort to Increase Exports
In any given year, the U.S. pork industry ships products to more than 100 countries. Since Iowa produces one-third of the country’s pigs, you can understand how exports add significantly to the bottom line of the Iowa businesses involved in pork production, as well as for all Iowa pig farmers. Today, more than 36 percent of the value received for a market pig is attributed to that international market demand.
International Trade Growth
Compare this to just 25 years ago when international markets were not as important in the mix. In fact, prior to 1995 the United States was a net importer of pork products. However, since 1989, the year the Unites States implemented its first free trade agreement with Canada, U.S. pork exports have increased by 1,550 percent as other international markets for pork were opened up through trade agreements.
When NAFTA (North American Free Trade Agreement) went into effect on January 1,1994, it created the world’s largest free trade area, encompassing more than 485 million people and a GDP of over $21 trillion. The agreement eliminated tariffs on pork traded between the U.S., Mexico and Canada; the result is that, in 2018, Mexico was our largest market by volume and Canada is fifth. Together they accounted for more than 40 percent of the pork that was exported from the United States.
In Iowa, this translates to nearly $770 million in value to pig farmers and their rural communities. The good news is that the United States, Canada and Mexico signed a trade agreement (USMCA) that preserves zero-tariff pork trade in North America for the long term.
Iowa Production and Tariffs on the Ag Industry
The bad news is that ratification of the USMCA is stalled because of the Trump administration’s steel and aluminum tariffs placed on both Canada and Mexico. These tariffs are causing economic harm to pig farmers and rural Iowa. It is vital for Iowa pork producers that these tariffs be lifted immediately. Mexico has retaliated with a 20 percent duty on U.S. pork and it will remain in place until the metal tariffs are lifted. That impact alone is valued at $12 per pig, says Iowa State University Economist Dermot Hayes. Canada has not placed tariffs on U.S. pork, but it could. Neither NAFTA nor the USMCA can be effective trade agreements for pork – and many other Iowa industries – until the metal tariffs are lifted.
Iowa pig farmers have a lot to be proud of: our pork production system is the envy of the world because its efficiency makes it the lowest cost producer on the planet. It yields one of our most competitive export products and sustains more than 141,000 jobs in rural Iowa. Iowa farmer commitment to provide safe, nutritious and affordable protein in a sustainable and socially responsible manner is not one they take lightly.
They are also not standing still, waiting for the tariff situation to be resolved. They are working to find and improve access to other international markets. I recently had the opportunity to witness this first hand while on an Iowa Economic Development Authority agricultural trade mission in March to Vietnam and The Philippines. These countries are experiencing tremendous wage growth and a burgeoning middle class. During our conversations with importers and restaurateurs, we found that Iowa agricultural products are in high demand when tariff and non-tariff barriers don’t make them cost-prohibitive.
We need to celebrate the innovation and entrepreneurial drive of pig farmers in Iowa that is behind our global competitive strength. Exports are vital to the vibrancy of rural Iowa. If Iowans want to sustain rural prosperity, they should advocate to our elected federal officials to rescind the metal tariffs so we can recapture and expand export markets for the products we produce so well.
Find out more about key industries and global business resources, including international trade and investment strategies in Greater Des Moines (DSM) and the state.
Through the Global DSM international talent strategy, The Partnership works to establish Greater Des Moines (DSM) as a global community attracting and retaining foreign-born persons to the region. Check out more Global DSM stories.
Through the Global DSM initiative, the Greater Des Moines Partnership works to establish Greater Des Moines (DSM) as a global community by bolstering global trade and foreign investments and leveraging international talent.