China Pigged Out On Pork
You know that moment when you realize you cooked way too much food for the holidays? You look around the table and see leftovers for weeks, but you’re in too deep and there’s nothing you can do about it now?
That’s the situation the world’s largest pork-consuming market finds itself in.
China’s in a pork supply glut. And their solution? Reinstating tariffs.
Not China’s favorite: Currently, the U.S. competes at a 33% tariff in China. Most other countries are only facing the 8% Most Favoured Nations (MFN) rate. But China’s not letting go of the 25% retaliatory tariff imposed during the trade war between Washington and Beijing.
Out of whack: China lowered its tariffs on frozen pork in 2020 from 12% to 8%, after a devastating African swine fever outbreak cut Chinese pork production down 33%, and domestic meat prices skyrocketed.
Chinese imports on steroids: This tariff break and severe supply shock led to record-breaking high imports through the first half of the year. But by then, China’s hog herd had started to recover. The market was flooded with product, and prices fell below production cost by Q3.
Getting things bacon track: October pork arrivals in China fell by 40% from year-ago levels, to 200,000 tonnes. However, customs data shows 2021 imports to date have only slipped 8% from last year, to 3.34 million tonnes.
Worse than coal for Christmas: The MFN tariff will return to 12% on Jan. 1, and U.S. pork producers will return to the 37% tariff the pork industry worked hard to decrease over the last few years.