More thoughts on exports

I receive newsletters and commentary from my industry connections around the world. One advantage of these connections is the ability to think about how the US industry is doing relative to other major production locations around the world.

I don’t know how many have been following the situation in Europe’s industry in the past few months. Prices have plunged and product is backing up in freezers since Russia announced a ban on all pork products from the EU in response to the EU support of the Ukrainian government in that on-going dispute.

Last week I wrote about the US export market and the importance of that market to our long term well being as an industry. The situation in Europe is a good example of the risks involved when a large part of your income comes from foreign trade and your major trading partner suddenly changes the rules.

This highlights why our foreign trading agreements (NAFTA, TPP, WTO, etc.) are so important. They give us some assurance as to what the rules are and the mechanisms to resolve conflicts regarding the rules. There have been times the rules have not appeared to be ‘fair’ from our viewpoint (or at least the viewpoint of segments of our industry). However, having these agreements in place allows us to at least know what the rules are.

As the situation in Europe so clearly demonstrates, relying on a single trading partner who plays with a different set of ‘rules’ is not sustainable in the long term. The consequences are too big for us with 25% of production now being exported somewhere else in the world.

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