August 20, 2010

Mexico will continue buying US pork despite tariff

Mexico's 5% tariff on US pork will not deter imports of the meat, which will remain cheaper than pork from other sources.

The tariff is in retaliation for the US limiting access of Mexican trucks to US roads.

The dispute comes at time when US pork prices are near the record high of US$94.41 per hundredweight set in 2008. Analysts expect prices to surpass that record soon because of this year's smaller supplies and strong exports.

USDA forecasts total US pork exports will be up 9% this year, while production will be down about 3.3%.

Rich Nelson, analyst at the advisory firm Allendale Inc, estimated the tariff at worst may knock off 5% of US pork exports to Mexico.

Canada supplies some pork to Mexico, but Canadian pork production has been declining, and that country may find it hard to replace the volume of pork the US ships.

"The main reason they buy so much from us is the proximity. It is a shorter haul," said Ron Plain, University of Missouri agricultural economist. "A 5% tariff is not going to be big enough to cause them to stop buying US pork."