Audio: Continued Success in Mexico’s Processing Sector Critical for U.S. Pork

Dan Halstrom, U.S. Meat Export Federation (USMEF) senior vice president of marketing, just returned from a series of meetings with major meat processors in Mexico. In the attached audio report, Halstrom explains why this is such a critical sector for U.S. pork exports, especially during a time of high pork production in the United States. While the U.S. still holds the lion’s share of Mexico’s imported pork market (about 85 percent this year, but down from 90 percent in 2014) Halstrom notes that the Canadian pork industry is aggressively targeting Mexico. This is especially true since the Russian market closed to Canadian pork in August 2014, in retaliation for economic sanctions related to the conflict in Ukraine. At that time, Russia was Canada’s third-largest pork export market and a major outlet for Canadian hams. Also looming is the possibility of retaliatory tariffs on U.S. pork and other meat products, as a result of the country-of-origin-labeling (COOL) dispute between the U.S., Mexico and Canada – something the U.S. industry can ill afford at this time. The World Trade Organization will hold arbitration meetings in this proceeding Sept. 15-16.

TRANSCRIPT:

Joe Schuele: In this U.S. Meat Export Federation report, we speak with senior vice president of marketing Dan Halstrom, who just returned from meetings with several major meat processors in Mexico. Halstrom explains why this sector is such an important customer for the U.S. pork industry.

Dan Halstrom: The further process sector in Mexico is by far the largest segment of consumption of U.S. pork. We’ve always been focused on the sector but we have a renewed push here recently, especially in light of the increased production here in the U.S., to make sure we are defending our share down in Mexico. We have competition from Canada with the exchange rate. They’ve gotten more competitive and we just need to be aware of this. So this effort is to solidify relationships, it’s to expand these relationships, and to make sure we defend our turf as it relates to this area of the Mexico business.

Joe Schuele: While the U.S. still has the lion’s share of Mexico’s imported pork market, the Canadian pork industry began aggressively targeting Mexico when it was shut out of the Russian market about a year ago.

Dan Halstrom: Without a doubt they have, and especially as it relates to hams – ham is by far the largest single product going into Mexico for further procession, and also for table meat. And they have definitely focused on that region.

Joe Schuele: Also looming is the threat of retaliatory tariffs as a result of the Country of Origin Labeling dispute between the U.S., Mexico and Canada.

Dan Halstrom: We have enough headwinds right now strictly with the peso devaluation. With the strengthening of the dollar against the peso recently to the tune of over 20 percent, it’s put imports in a difficult position. They still need to import but any kind of retaliation, any amount above the zero duty would not help demand at all. It would hinder it. So we have to be very aware of possible retaliation on the COOL side and hopefully that does not happen.

Joe Schuele: For more on this and other trade issues, please visit USMEF.org. For the U.S. Meat Export Federation, I’m Joe Schuele.