By Lloyd Phillips
For various reasons, South Africa’s R3 billion-a-year primary pork value chain is unlikely to be impacted directly by the USA’s recently announced blanket 31% import tariffs on products from South Africa. However, there may potentially be indirect effects.
The USA reportedly would like to start exporting its own pork products to South Africa. However, this is hampered by the fact that America remains positive for porcine reproductive and respiratory syndrome (PRRS) while South Africa is one of only approximately 10 countries globally that is officially free of this reportedly devastating pig disease.
According to Dr Peter Evans, chief executive officer of the South African Pork Producers’ Organisation (SAPPO), South Africa produces about 350 000 tons, and imports about 50 000 tons, of pork annually. The main suppliers of these imports are Brazil, Canada and parts of the European Union that are also PPRS-free.
These quantities are generally sufficient to meet domestic demand.
“There are some reports doing the rounds where the US is pointing fingers at us for making it difficult for the US to export its pork into South Africa,” says Evans.
“South Africa has strict protocols in place to allow the import of certain pork cuts from countries that are not PRRS-free. However, the US wants to send us cuts, like shoulders and untrimmed ribs, that we in South Africa consider high-risk for PRRS. It’s not an outright ban on pork imports from the USA. South Africa’s position is actually based on science and we have a precedent in the relevant international organisations.”
South Africa itself exports only approximately 5% of its total pork production. The majority of this is to some neighbouring countries. No South African pork goes to the USA.
However, according to Evans, existing and confirmed new markets in Africa and Asia for South African pork present significant added opportunity for South Africa’s pig industry. This could be especially beneficial since South Africa’s pig producers continue to labour under ever-increasing production costs. Even though local pork prices are showing confirmed and anticipated increases, margins between costs versus income remain riskily tight.
Potential risks and rewards
Evans adds that although SAPPO is unsure what exactly will happen, potential tariff wars between the US and its other trade partners may possibly cause changes in international pork markets.
Various international market experts are predicting that some countries may stop importing pork from the US in retaliation of the latter’s own import tariffs. South Africa could potentially take advantage of these vacuums in pork supply.
However, disruptions in international pork trade could potentially unfavourably increase competition in markets that South Africa already exports pork to or that it would like to export pork to. Similarly, these international competitors may start eyeing South Africa as a potential market for their pork exports. This too would put unwanted pressure on South Africa’s domestic pork prices.
Regarding the latter potential scenario, Evans says South Africa’s generally weak currency tends to deter other pork-producing countries from exporting to South Africa. The comparatively high costs of international shipping are also a deterrent to many pork exporters.
Also read:
What the US import tariffs mean for South Africa’s agriculture
New tariffs for importation of plants and plant products into SA
