March 24, 2004

US Pork Exports To Get Boost From Removal Of Japanese Tariffs

Pork exporters in the United States could see an increase in business when Japan' pork safeguard tariff is lifted on April 1.
 
In effect since Aug. 1, 2003, Japan's safeguard tariff raises the minimum gate price from 524 yen per kilogram to 653 yen/kg. The rate will return to 524 yen/kg as of April 1, said Brett Stuart, trade analyst with the U.S. Meat Export Federation.
 
The safeguard can be triggered when any of three conditions are met, according to the U.S. Department of Agriculture's Foreign Agricultural Service.
 
The safeguard goes into effect when the volume of imports for a given quarter exceeds by 19% or more the average for the same quarter during the three previous years. Once triggered, the safeguard is effective through the end of the Japanese fiscal year, or March 31.
 
There is also an annual safeguard that would be triggered if the annual total of imports exceeds the previous year by 19%, then the higher gate price will go into effect and remain for the first quarter of the next fiscal year.
 
The third is a special safeguard, which when triggered raises the tariff on pork by 33%. FAS said the trigger mechanism for the special safeguard is based on imports as a percentage of consumption. It is triggered when imports account for more than 30.1% of consumption and exceed 105% of average imports for the preceding three years.
 
Stuart is forecasting strong U.S. pork exports to Japan for at least the first six months of 2004 due to the absence of U.S. beef and limited imported poultry supplies on the Japan market. He also expects the pork safeguard to be triggered again after Japan's first fiscal quarter (April-June) due to stronger overall pork imports.
 
Steve Meyer, analyst with Paragon Economics, said when the Japanese safeguard is lifted, U.S. pork exports would be expected to increase some but it is impossible to predict by how much due to foreign competition and other variables. He expects most of the increase in U.S. exports to be for lower- priced cuts such as butts and other frozen pork items. He said the reduced gate price would allow more of these cuts to be in the mix with higher-priced products within the shipping containers, increasing overall volume while meeting the lowered minimum gate price.
 
Industry sources said if the safeguard is again triggered, it likely would become effective Aug. 1 rather than July 1 since it takes a few weeks past the end of the fiscal quarter to determine the change in imports compared with previous years.
 
Japan was the U.S.' largest export customer for pork and pork variety meats in 2003, purchasing 269,621 metric tons, or nearly 36% of total pork exports, according to USMEF export data compiled from USDA statistics. The value of the sales to Japan last year was just over $784 million, nearly half of the U.S.' total pork sales internationally.