OMAHA (DTN) -- The White House announced Thursday that Argentina has agreed to accept U.S. pork products for the first time since 1992. The announcement comes after a meeting between U.S. Vice President Mike Pence and Argentine President Mauricio Macri earlier this week.
It's a small prospective market at the moment, but Argentina has had a de facto ban on U.S. pork products for 25 years because of "unscientific mitigation requirements and other sanitary issues that are not based on science," as the National Pork Producers Council states. NPPC had hoped since Marci was elected in late 2015 that his pro-trade stance would open the door to U.S. pork. Argentina has a population of 41 million and higher per-capita income than Mexico.
Under terms of the agreement, all fresh, chilled and frozen pork products from the U.S. will be eligible for export. The White House stated the agreement opens up a potential $10-million-a-year market.
"Today's announcement is a big win for American pork producers and proves that President (Donald) Trump is getting real results for America's farmers and ranchers," Vice President Pence said. "After 25 years of discussions, America's pork producers will soon be able to export their fine product to Argentina. This is one more example of the commitment of President Trump and his entire Administration to breaking down international trade barriers and making free and fair trade a win-win for American workers, farmers, and our trading partners."
Erin Borror, an economist for the U.S. Meat Export Federation, said the $10 million estimate is realistic. Most U.S. pork would likely go into further processed products in Argentina, she said.
"That's where I would imagine that $10 million annual number would come from," Borror said.
The Argentina market is fairly closed. They only import mainly from Brazil with a small amount coming from the European Union. Brazilian exports to Argentina peaked in 2011 at around $155 million in value, but then began declining, mainly because of restrictions by Argentina. The country has started taking in a little more pork.
"The import numbers have bounced around lately," Borror said. "They started to rebound again last year and went up again this year. By my estimates, Brazil could export somewhere around $95 million in pork this year."
A study by economist Dermot Hayes at Iowa State University stated annual pork consumption per capita has increased in Argentina from roughly 1 kilogram in 2005 up to roughly 13 kilograms now. That per-capita consumption is expected to grow, but the country still consumes significantly more beef and poultry per capita. The U.S. might take some market from Brazil, but in reality there is room to grow consumption.
"So U.S. pork would be competing against mostly Brazilian and obviously domestic production, but also in a growing market because that consumption has been steadily increasing," Borror said.
Outside of Argentina, the USMEF reports pork exports to Central and South America were up 51% in volume to 81,930 metric tons and 56% in value to $200.3 million over the first six months of the year, led by growth in sales to Colombia and Chile. Exports doubled to Peru as well. For all of 2016, pork sales to Central and South America reached $335 million and 135,954 metric tons, both record highs.
"U.S. pork producers are the most competitive in the world and we have long sought the opportunity to provide affordable, high-quality pork in Argentina," said Ken Maschhoff, president of the National Pork Producers Council.
Maschhoff thanked Agriculture Secretary Sonny Perdue, Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer, all of whom worked to help compete the agreement.
Maschhoff added, "We also thank Vice President Pence for his efforts, including a recent visit to Argentina, to move a trade agreement that promises significant U.S. economic benefits over the finish line."
Argentina has a 10% tariff on pork imports. Chile and Colombia, because of free trade agreements, do not have tariffs on U.S. pork exports.
Under the agreement announced Thursday, Argentine food-safety officials will visit facilities in the U.S. to verify the U.S. meat inspection system. After that, exports will resume after any pending technical issues are resolved.
Chris Clayton can be reached at Chris.Clayton@dtn.com
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