Saturday, June 07, 2003
IT'S OFFICIAL: THE TIMES ACKNOWLEDGES
THAT THE SARS-ASSOCIATED CORONAVIRUS
HAS BEEN FOUND IN WILD PIGS
The media is taking its time on the SARS-in-pigs story. We're shocked, shocked! Knowing how the pork industry and its research pimps operate, we're lucky that there is any story at all.
But finally in the New York Times, Lawrence Altman (MD and president of the CDC fan club) broke the porcine silence, Altman writes: "Yet another area of uncertainty [about SARS], the health agency said, concerns an unconfirmed news report that scientists in China have found the SARS virus in a wider variety of animals than previously reported. The new species include snakes, wild pigs, bats and monkeys, though not household pets, according to statements made at an Asian scientific meeting in Beijing last week."
Altman continues, "In May, scientists reported finding the virus in masked palm civets and raccoon dogs, and evidence of infection among badgers in a wildlife market in Shenzen, in southern China. The W.H.O. has received information about the Shenzen findings but little about the newer findings despite telephone calls to Chinese scientists, said a frustrated Dr. Klaus Stohr, who directs the scientific investigation of SARS for the Geneva-based agency."
Alman reports that Dr. Stohr told him, "If this virus is present in so many species, it would be a big surprise biologically." Stohr also told Altman that confirmation of the findings would make "control of SARS much more difficult, without doubt, because there would be so many sources."
We first suggested that pigs were a possible and probable source of SARS on March 27. A couple of pig researchers violently disagreed with us which is not surprising since most research into pig diseases is either directly or indirectly funded by the pork industry.
We're still waiting for more details on that amazing pig experiment done weeks ago under the auspices of WHO -- you know, the one that shows that pigs can't become infected with the SARS-associated coronavirus. Who conducted that research, the mayor of Toronto?
The big question still is whether animals like pigs will become the reservoir for a much worse epidemic as time goes on. If pigs are involved, the pork industry will do it's best to circle the wagons and protect the industry. We still haven't seen a mention of the SARS-in-pigs story at The Pig Site which tries to keep up on every new story about pigs. Well, almost every story.
We were amused weeks ago when we saw that the pig research establishment seemed to be patting itself on the back about how swine science would be helpful in understanding how to control the SARS epidemic, carefully avoiding discussions of research that shows that coronaviruses go back and forth between pigs and people with the greatest of ease. There was a collective sigh of relief when it looked like civet cats are the source of SARS. Nobody seemed to want to focus on the wild boars that are also sold in the famous wild animal gourmet markets in China.
Stay tuned.
THAT THE SARS-ASSOCIATED CORONAVIRUS
HAS BEEN FOUND IN WILD PIGS
The media is taking its time on the SARS-in-pigs story. We're shocked, shocked! Knowing how the pork industry and its research pimps operate, we're lucky that there is any story at all.
But finally in the New York Times, Lawrence Altman (MD and president of the CDC fan club) broke the porcine silence, Altman writes: "Yet another area of uncertainty [about SARS], the health agency said, concerns an unconfirmed news report that scientists in China have found the SARS virus in a wider variety of animals than previously reported. The new species include snakes, wild pigs, bats and monkeys, though not household pets, according to statements made at an Asian scientific meeting in Beijing last week."
Altman continues, "In May, scientists reported finding the virus in masked palm civets and raccoon dogs, and evidence of infection among badgers in a wildlife market in Shenzen, in southern China. The W.H.O. has received information about the Shenzen findings but little about the newer findings despite telephone calls to Chinese scientists, said a frustrated Dr. Klaus Stohr, who directs the scientific investigation of SARS for the Geneva-based agency."
Alman reports that Dr. Stohr told him, "If this virus is present in so many species, it would be a big surprise biologically." Stohr also told Altman that confirmation of the findings would make "control of SARS much more difficult, without doubt, because there would be so many sources."
We first suggested that pigs were a possible and probable source of SARS on March 27. A couple of pig researchers violently disagreed with us which is not surprising since most research into pig diseases is either directly or indirectly funded by the pork industry.
We're still waiting for more details on that amazing pig experiment done weeks ago under the auspices of WHO -- you know, the one that shows that pigs can't become infected with the SARS-associated coronavirus. Who conducted that research, the mayor of Toronto?
The big question still is whether animals like pigs will become the reservoir for a much worse epidemic as time goes on. If pigs are involved, the pork industry will do it's best to circle the wagons and protect the industry. We still haven't seen a mention of the SARS-in-pigs story at The Pig Site which tries to keep up on every new story about pigs. Well, almost every story.
We were amused weeks ago when we saw that the pig research establishment seemed to be patting itself on the back about how swine science would be helpful in understanding how to control the SARS epidemic, carefully avoiding discussions of research that shows that coronaviruses go back and forth between pigs and people with the greatest of ease. There was a collective sigh of relief when it looked like civet cats are the source of SARS. Nobody seemed to want to focus on the wild boars that are also sold in the famous wild animal gourmet markets in China.
Stay tuned.
Wednesday, June 04, 2003
WILD PIGS IN CHINA TEST POSITIVE FOR
THE SARS CORONAVIRUS
Most of the media seems to be ignoring an
important new fact about SARS
According to the South Africa's News24.com, wild pigs in China have tested positive for the SARS-associated coronavirus, which should raise serious questions about the possibility of SARS entering the food supply in China, Canada, and other places where there are major SARS epidemics. Certainly no pork or live pigs should be brought into the United States from Canada until this matter is fully investigated.
According to the report, "Zhong Nanshan, touted as China's first health expert to identify the new disease, said Guangdong province's Center for Disease Control and Prevention recently completed a study of 30 animal types and found the virus in snakes, wild pigs, monkeys and bats." Accoding to the report, Zhong said, "It's in a lot of animals, but as far as whether this disease is transmitted from animals to humans, we still don't know." The report also notes that "he said the animals tested were taken from wildlife markets in the province in southern China, where the disease is believed to have originated." It is now known that 30% of the original SARS cases in China were foodhandlers. Whether they were handling pork from infected wild pigs remains to be seen.
This report will devastate some pig researchers who have arrogantly insisted that SARS has nothing to do with pigs. If domestic pigs turn out to also be a reservoir of the SARS-associated coronavirus, SARS could become one of the most nightmarish pandemics of all time.
THE SARS CORONAVIRUS
Most of the media seems to be ignoring an
important new fact about SARS
According to the South Africa's News24.com, wild pigs in China have tested positive for the SARS-associated coronavirus, which should raise serious questions about the possibility of SARS entering the food supply in China, Canada, and other places where there are major SARS epidemics. Certainly no pork or live pigs should be brought into the United States from Canada until this matter is fully investigated.
According to the report, "Zhong Nanshan, touted as China's first health expert to identify the new disease, said Guangdong province's Center for Disease Control and Prevention recently completed a study of 30 animal types and found the virus in snakes, wild pigs, monkeys and bats." Accoding to the report, Zhong said, "It's in a lot of animals, but as far as whether this disease is transmitted from animals to humans, we still don't know." The report also notes that "he said the animals tested were taken from wildlife markets in the province in southern China, where the disease is believed to have originated." It is now known that 30% of the original SARS cases in China were foodhandlers. Whether they were handling pork from infected wild pigs remains to be seen.
This report will devastate some pig researchers who have arrogantly insisted that SARS has nothing to do with pigs. If domestic pigs turn out to also be a reservoir of the SARS-associated coronavirus, SARS could become one of the most nightmarish pandemics of all time.
Sunday, June 01, 2003
WOULD CHINA COVER UP A
SARS EPIDEMIC IN PIGS?
If PRRS is any indication, the unfortunate
answer is yes.
China seems to be circling the wagons again. Recent reports indicate that it's back to politics as usual regarding SARS, and most information coming out about the epidemic is less than trustworthy. Not that America is necessarily telling the truth about it's own SARS epidemic. (See the Vallejo story below.)
The Baltimore Sun story from the pig farm in Guangzhou still makes us wonder if the possibility that pigs are the reservoir of SARS is so disturbing that nobody wants to go there. Did the pigs on that farm have the SARS coronavirus or not? China covered up the epidemic of PRRS in pigs for many years. They know the drill.
Menwhile, the attempt to blame civet cats for the epidemic may have encountered a setback when Nature published research on 8 civet cats in China that were negative for the virus. And it is puzzling that not all of the animals in the exotic animal market in Guangdong were tested for the SARS-associated coronavirus. It's amazing how the media has latched onto the civet cat story and now it has become the conventinal wisdom that civet cats are the source of SARS. The sloppiness of the reporting on this matter indicates that the media is still in a kind of denial about how serious SARS is. All you have to do is read some of the accounts of what it is like to have SARS and then consider the possibility that asymptomatic
SARS carriers are spreading the disease and then factor in the possibility that the disease is seasonal as well as the possibility that those who are infected remain infected, and you have a scenario you'd rather not think about. Which is what much of the media seems to be doing.
One wonders if the the top SARS researchers at the CDC and WHO are aware of the sick pig situation in Guangdong. If they're, they are surrounded by incompetent idiots. If they do and they haven't tested pigs throughout the Guangdong Province, then the leaders are worse than idiots. Actually, if the CDC and WHO screw up SARS, the whole world might take people who say they also got AIDS and CFIDS wrong much more seriously. And that would be a good thing.
HOW MUCH PORK DO THE
CHINESE CONSUME?
The following public testimony was given to Congress by an official from the National Pork Producers Council in 1999. It clearly shows how important pork is to the Chinese diet and economy.
Testimony of Nicholas D. Giordano On Behalf of the National Pork Producers Council
Before The U.S. House Int'l Relations Committee Subcommittee on Asia and the Pacific On The Embatled State of U.S. - China Relations: Assessing the Zhu Rongji Visit April 21, 1999
Mr. Chairman and Members of the Subcommittee:
I am Nicholas D. Giordano, International Trade Counsel for the National Pork Producers Council. I very much appreciate the opportunity to appear here on behalf of U.S. pork producers to express our views on the recent visit of Chinese Premier Zhu Rongji to the United States and the trade implications for America's pork producers.
The National Pork Producers Council is a national association representing 44 affiliated states that annually generate approximately $11 billion in farm gate sales (although farm gate sales were reduced to about $9 billion in 1998 as a result of the lowest hog prices ever in real terms). According to a recent Iowa State study conducted by Otto and Lawrence, the U.S. pork industry supports an estimated 600,000 domestic jobs and generates more than $64 billion annually in total economic activity. With 10,988,850 litters being fed out annually, U.S. pork producers consume 1.065 billion bushels of corn valued at $2.558 billion. Feed supplements and additives represent another $2.522 billion of purchased inputs from U.S. suppliers which help support U.S. soybean prices, the U.S. soybean processing industry, local elevators and transportation services based in rural areas.
U.S. Agriculture Benefits From Expanded Trade
International trade is vital to the future of American agriculture. As the world's biggest exporter of agricultural products we have a critical interest in the development and maintenance of strong and effective rules for international trade. This is especially true for pork, the world's meat of choice, which represents 44 percent of daily meat protein intake in the world. Notwithstanding the huge global market for pork and pork products, efficient U.S. producers were precluded from exporting significant volumes of pork in the pre-Uruguay Round Agreement, pre-NAFTA era. A combination of foreign market trade barriers and highly subsidized competitors kept a lid on U.S. pork exports.
The Uruguay Round succeeded in establishing a more effective set of trade rules for the agricultural sector and began the process of reducing trade-distorting subsidies and import barriers. Since 1995, when the Uruguay Round Agreement went into effect, U.S. pork exports to the world have increased by approximately 86 percent in volume terms and 80 percent in value terms from 1994 levels. According to a study by CF Industries, exports were so important to the industry in 1997 (when hog prices were at normal levels) that cessation of exports (due for example to an embargo or animal disease outbreak) would have caused cash hog prices to plummet by $15.73 per head.
While our recent export performance is impressive, it nevertheless remains severely limited by factors such as the lack of access to many of the world's pork markets, including China, which is the largest pork consuming market in the world.
Pork Producers Strongly Support China's Accession to the WTO
The market access concessions made by China during the recent visit of Chinese Premier Zhu Rongji to the United States are sensational news for U.S. pork producers. We commend Ambassador Barshefsky, Ambassador Scher, Secretary Glickman, and their hard-working staffs. We also thank you Mr. Chairman for your all your help and leadership on this matter. Pork producers also very much appreciate the efforts of other members of this subcommittee. Together, you have hit a grand slam home run giving U.S. pork producers access to the largest pork consuming market in the world.
Mr. Chairman, as you and other members of this subcommittee know, U.S. pork producers are suffering from very low prices. Indeed, our industry just came through a period with the lowest hog prices ever in real terms. For us, and for most other sectors of U.S. agriculture, which also are suffering from very low prices, the importance of consummating this deal with China and getting China quickly into the WTO cannot be overstated. As co-chair of the 80 organization Agriculture Trade Coalition, the National Pork Producers Counsel will leave no stone unturned in our quest to get China into the WTO and to get permanent Normal Trade Relations extended to China.
We do not deny that there are problems in the U.S. - China relationship. However, we do not see how walking away from these fantastic market access concessions negotiated with China would promote U.S. interests. As we see it, this is a one-way trade agreement; the U.S. benefits significantly because China's previously closed market now opens to U.S. exports while China simply maintains the access to the U.S. market that it has had for almost 20 years. U.S. farmers, ranchers, workers, and business will benefit and our trade deficit with China will be reduced.
China's Market Access Concessions on Pork
Previously, China blocked U.S. pork imports through a system of high tariffs, restrictive import licensing and distribution practices, and complicated and arbitrary sanitary requirements.
Under the terms of the recent negotiations, China will accept pork from any Food Safety and Inspection Service (FSIS) approved packing plant, phase out its restrictive import and distribution procedures, and lower tariffs.
Tariffs on frozen pork variety meats (such as stomachs, intestines, and hearts --the predominant product currently demanded by Chinese importers) and frozen pork muscle meats, will be phased down to 12 percent. Tariffs on frozen pork carcasses and fresh and processed pork products will be set at 20 percent. Tariffs will be lowered from 20 percent to 12 percent in equal increments on the frozen products over a four-year period from the time China becomes a WTO member. Previously, in the course of negotiations with the U.S., China had agreed to lower all pork tariffs to 20 percent from rates as high as 43 percent.
China is a Vast Pork Consuming Market
In China, pork is by far the predominant source of meat protein consumed. China consumes more pork per capita than the amount consumed per capita in the United States making it a vast pork consuming market. Indeed, China consumes approximately 50 percent of the total pork annually consumed in the world and most industry analysts project pork demand in China to increase by 6 to 7 percent per year in the early part of the next century. One group of very respected agricultural economists forecast that Chinese pork consumption will increase by approximately 8 million metric tons within the next ten years. To put this number in perspective, in 1998, U.S. pork exports were 529,000 metric tons. Thus, China is not a potential market; it is a huge and growing pork consumption market.
While China is the world's largest producer of pork, 85 percent of its pork comes from backyard producers. As incomes continue to rise and consumers demand higher quality pork and more of it, as well as more beef, poultry, dairy and alcohol products, commercial production of pork in China will become increasingly costly. This is because China must achieve this growth in consumption with only 9 percent of the world's arable land. According to FAO data, China must feed 13.0 people for each hectare of arable land, whereas Europe must feed 4.1 people, and the United States must feed only 1.4 people.
China is moving from having mid-western U.S. type corn prices to having Taiwanese and Japanese type corn prices. An important choice must be made, China must either import feed grains or livestock products to achieve consumer diets similar to those of the developed world. China is making the right choice in opening its market to meat imports. Meat should be produced in grain surplus countries not in grain deficit countries. Countries that import feed grains must pay a premium over world market prices and feed grains constitute over 60 percent of the cost of raising hogs. Pork producers in Japan and Taiwan pay approximately double the amount paid for feed by a Nebraska pork producer. Thus, China apparently wants to avoid the mistakes made by Japan, South Korea, and Taiwan.
The cost of producing pork in China currently is higher than the cost of producing pork in the United States. By virtue of the subsidies provided to its pork industry, China has been able to suppress the demand for imported pork smuggled into the country and maintain its ability to export pork. If China were to continue to block pork imports and, instead tried to keep pace with expanding domestic demand through domestic production, Chinese pork prices would be much higher than would otherwise be the case. Further, Chinese subsidies and investment in agriculture would keep capital from flowing to more efficient and remunerative uses. The costs of this misallocation would increase over time as China tried to extract more and more pork from a limited source of supply. In time, China, like Japan and Korea, would be forced to import pork to reduce prices.
China's Ban on Pork Imports Remains in Effect
High tariff rates and a discriminatory value added tax put imported pork at a sharp competitive disadvantage to domestic pork. Moreover, complicated and non-transparent restrictions on imported pork, administered by China's State Administration of Inspection and Quarantine (SAIQ) - which recently replaced it's quarantine administration CAPQ - make it virtually impossible to import pork. SAIQ contends that Chinese restaurants and hotels can obtain licenses to import pork. Unlike beef, for which licenses are available through regional SAIQ offices, SAIQ says that it disseminates pork import licenses solely through SAIQ headquarters. In reality, very few licenses have been granted by SAIQ to hotel and restaurant importers.
In 1997, SAIQ provided quotas to 11 establishments in Australia, Canada, and the United States as eligible to export meat and poultry to China for general consumption under a one year "pilot program." While in one sense this was a positive development because, as a matter of law, these imports are not limited to the hotel and restaurant sector, as a matter of fact, high tariffs and other restrictive measures kept a tight lid on imports.
Under the pilot program, the qualified establishments include a pork facility in Australia that received a quota of 2,000 MT, three pork facilities in Canada that received a total quota of 68,000 MT, and one pork facility in the U.S. that received a quota of 5,500 MT. The Australian and U.S. exports must be imported exclusively by Nanjing Five-Star Hotel Corporation Ltd. and the Canadian product must be imported exclusively by Chaoying Foodstuff Ltd. While pork is not on the formal list of state traded products in China, the appointment of these exclusive importers is troubling. Indeed, the U.S. pork industry understands that SAIQ officials are involved with the ownership/management of each of these importers. The pilot program has been a failure due to high duties and taxes, unfair sanitary barriers, restrictions on the number of importers, and competition from smuggled pork imports.
Canadian pork quotas are much higher than U.S. quota levels under the pilot program but Canadian pork must be imported pursuant to the Canada-China pork protocol. Canadian industry officials are extremely upset with this protocol because onerous and non-scientific restrictions will preclude the shipment of any significant amount of pork from Canada to China. The Chinese, supposedly at the behest of the Australians, expressed concern to the Canadians about Porcine Reproductive and Respiratory Syndrome (PRRS). The PRRS virus is endemic to the world and it defies credulity to suggest that China - a country where serious porcine diseases are rampant - does not have PRRS. Further, unlike porcine diseases such as hog cholera and FMD, PRRS is not transmitted through imported meat to domestic swine
Despite official import restrictions, demand from the population for pork, particularly high-quality variety meats (e.g. hearts, stomachs, intestines), is so high that sizeable quantities of imported pork are being smuggled into China principally through Hong Kong. The pork is distributed to the general population mostly through local wholesale markets with a small amount distributed through supermarkets. Technically the importation and distribution of this product is illegal, a fact which is generally acknowledged by the Hong Kong importers and Chinese distributors. In 1998, this trade represented approximately $50 million for US exporters, although the total value of the pork trade with China conducted through Hong Kong is estimated to be as high as US $200 million. (An additional $8 million of U.S. pork was imported directly by China in 1998. Industry sources in China report that even these imports that directly enter China do so on a negotiated basis, not in accord with the official position.) It is difficult and expensive to smuggle pork into China and, without question, pork imports would explode if China lifted its de facto ban. Even under restrictive trade regulations, Chinese demand is so large at times that they have bought the entire world's supply of certain pork variety meats.
Conclusion
The U.S. government has convinced China to lift its de facto ban on imported pork as a condition of entry to the World Trade Organization. In order to become a consistent and reliable supplier of pork, NPPC respectfully urges the Congress to work closely with the Administration to complete the WTO package and extend permanent NTR to China.
The United States is uniquely positioned to reap the benefits of a liberalized Chinese pork sector. The U.S. exported over $1.1 billion in pork in 1998 and exports grew by over 15% in spite of the global financial crisis.
China is surpassing Japan as the single largest source of the U.S. trade deficit. If China liberalized its pork market, the U.S. would be exporting huge volumes of pork to that country. The U.S. pork industry alone could make a significant dent in the U.S.- China trade imbalance.
SARS EPIDEMIC IN PIGS?
If PRRS is any indication, the unfortunate
answer is yes.
China seems to be circling the wagons again. Recent reports indicate that it's back to politics as usual regarding SARS, and most information coming out about the epidemic is less than trustworthy. Not that America is necessarily telling the truth about it's own SARS epidemic. (See the Vallejo story below.)
The Baltimore Sun story from the pig farm in Guangzhou still makes us wonder if the possibility that pigs are the reservoir of SARS is so disturbing that nobody wants to go there. Did the pigs on that farm have the SARS coronavirus or not? China covered up the epidemic of PRRS in pigs for many years. They know the drill.
Menwhile, the attempt to blame civet cats for the epidemic may have encountered a setback when Nature published research on 8 civet cats in China that were negative for the virus. And it is puzzling that not all of the animals in the exotic animal market in Guangdong were tested for the SARS-associated coronavirus. It's amazing how the media has latched onto the civet cat story and now it has become the conventinal wisdom that civet cats are the source of SARS. The sloppiness of the reporting on this matter indicates that the media is still in a kind of denial about how serious SARS is. All you have to do is read some of the accounts of what it is like to have SARS and then consider the possibility that asymptomatic
SARS carriers are spreading the disease and then factor in the possibility that the disease is seasonal as well as the possibility that those who are infected remain infected, and you have a scenario you'd rather not think about. Which is what much of the media seems to be doing.
One wonders if the the top SARS researchers at the CDC and WHO are aware of the sick pig situation in Guangdong. If they're, they are surrounded by incompetent idiots. If they do and they haven't tested pigs throughout the Guangdong Province, then the leaders are worse than idiots. Actually, if the CDC and WHO screw up SARS, the whole world might take people who say they also got AIDS and CFIDS wrong much more seriously. And that would be a good thing.
HOW MUCH PORK DO THE
CHINESE CONSUME?
The following public testimony was given to Congress by an official from the National Pork Producers Council in 1999. It clearly shows how important pork is to the Chinese diet and economy.
Testimony of Nicholas D. Giordano On Behalf of the National Pork Producers Council
Before The U.S. House Int'l Relations Committee Subcommittee on Asia and the Pacific On The Embatled State of U.S. - China Relations: Assessing the Zhu Rongji Visit April 21, 1999
Mr. Chairman and Members of the Subcommittee:
I am Nicholas D. Giordano, International Trade Counsel for the National Pork Producers Council. I very much appreciate the opportunity to appear here on behalf of U.S. pork producers to express our views on the recent visit of Chinese Premier Zhu Rongji to the United States and the trade implications for America's pork producers.
The National Pork Producers Council is a national association representing 44 affiliated states that annually generate approximately $11 billion in farm gate sales (although farm gate sales were reduced to about $9 billion in 1998 as a result of the lowest hog prices ever in real terms). According to a recent Iowa State study conducted by Otto and Lawrence, the U.S. pork industry supports an estimated 600,000 domestic jobs and generates more than $64 billion annually in total economic activity. With 10,988,850 litters being fed out annually, U.S. pork producers consume 1.065 billion bushels of corn valued at $2.558 billion. Feed supplements and additives represent another $2.522 billion of purchased inputs from U.S. suppliers which help support U.S. soybean prices, the U.S. soybean processing industry, local elevators and transportation services based in rural areas.
U.S. Agriculture Benefits From Expanded Trade
International trade is vital to the future of American agriculture. As the world's biggest exporter of agricultural products we have a critical interest in the development and maintenance of strong and effective rules for international trade. This is especially true for pork, the world's meat of choice, which represents 44 percent of daily meat protein intake in the world. Notwithstanding the huge global market for pork and pork products, efficient U.S. producers were precluded from exporting significant volumes of pork in the pre-Uruguay Round Agreement, pre-NAFTA era. A combination of foreign market trade barriers and highly subsidized competitors kept a lid on U.S. pork exports.
The Uruguay Round succeeded in establishing a more effective set of trade rules for the agricultural sector and began the process of reducing trade-distorting subsidies and import barriers. Since 1995, when the Uruguay Round Agreement went into effect, U.S. pork exports to the world have increased by approximately 86 percent in volume terms and 80 percent in value terms from 1994 levels. According to a study by CF Industries, exports were so important to the industry in 1997 (when hog prices were at normal levels) that cessation of exports (due for example to an embargo or animal disease outbreak) would have caused cash hog prices to plummet by $15.73 per head.
While our recent export performance is impressive, it nevertheless remains severely limited by factors such as the lack of access to many of the world's pork markets, including China, which is the largest pork consuming market in the world.
Pork Producers Strongly Support China's Accession to the WTO
The market access concessions made by China during the recent visit of Chinese Premier Zhu Rongji to the United States are sensational news for U.S. pork producers. We commend Ambassador Barshefsky, Ambassador Scher, Secretary Glickman, and their hard-working staffs. We also thank you Mr. Chairman for your all your help and leadership on this matter. Pork producers also very much appreciate the efforts of other members of this subcommittee. Together, you have hit a grand slam home run giving U.S. pork producers access to the largest pork consuming market in the world.
Mr. Chairman, as you and other members of this subcommittee know, U.S. pork producers are suffering from very low prices. Indeed, our industry just came through a period with the lowest hog prices ever in real terms. For us, and for most other sectors of U.S. agriculture, which also are suffering from very low prices, the importance of consummating this deal with China and getting China quickly into the WTO cannot be overstated. As co-chair of the 80 organization Agriculture Trade Coalition, the National Pork Producers Counsel will leave no stone unturned in our quest to get China into the WTO and to get permanent Normal Trade Relations extended to China.
We do not deny that there are problems in the U.S. - China relationship. However, we do not see how walking away from these fantastic market access concessions negotiated with China would promote U.S. interests. As we see it, this is a one-way trade agreement; the U.S. benefits significantly because China's previously closed market now opens to U.S. exports while China simply maintains the access to the U.S. market that it has had for almost 20 years. U.S. farmers, ranchers, workers, and business will benefit and our trade deficit with China will be reduced.
China's Market Access Concessions on Pork
Previously, China blocked U.S. pork imports through a system of high tariffs, restrictive import licensing and distribution practices, and complicated and arbitrary sanitary requirements.
Under the terms of the recent negotiations, China will accept pork from any Food Safety and Inspection Service (FSIS) approved packing plant, phase out its restrictive import and distribution procedures, and lower tariffs.
Tariffs on frozen pork variety meats (such as stomachs, intestines, and hearts --the predominant product currently demanded by Chinese importers) and frozen pork muscle meats, will be phased down to 12 percent. Tariffs on frozen pork carcasses and fresh and processed pork products will be set at 20 percent. Tariffs will be lowered from 20 percent to 12 percent in equal increments on the frozen products over a four-year period from the time China becomes a WTO member. Previously, in the course of negotiations with the U.S., China had agreed to lower all pork tariffs to 20 percent from rates as high as 43 percent.
China is a Vast Pork Consuming Market
In China, pork is by far the predominant source of meat protein consumed. China consumes more pork per capita than the amount consumed per capita in the United States making it a vast pork consuming market. Indeed, China consumes approximately 50 percent of the total pork annually consumed in the world and most industry analysts project pork demand in China to increase by 6 to 7 percent per year in the early part of the next century. One group of very respected agricultural economists forecast that Chinese pork consumption will increase by approximately 8 million metric tons within the next ten years. To put this number in perspective, in 1998, U.S. pork exports were 529,000 metric tons. Thus, China is not a potential market; it is a huge and growing pork consumption market.
While China is the world's largest producer of pork, 85 percent of its pork comes from backyard producers. As incomes continue to rise and consumers demand higher quality pork and more of it, as well as more beef, poultry, dairy and alcohol products, commercial production of pork in China will become increasingly costly. This is because China must achieve this growth in consumption with only 9 percent of the world's arable land. According to FAO data, China must feed 13.0 people for each hectare of arable land, whereas Europe must feed 4.1 people, and the United States must feed only 1.4 people.
China is moving from having mid-western U.S. type corn prices to having Taiwanese and Japanese type corn prices. An important choice must be made, China must either import feed grains or livestock products to achieve consumer diets similar to those of the developed world. China is making the right choice in opening its market to meat imports. Meat should be produced in grain surplus countries not in grain deficit countries. Countries that import feed grains must pay a premium over world market prices and feed grains constitute over 60 percent of the cost of raising hogs. Pork producers in Japan and Taiwan pay approximately double the amount paid for feed by a Nebraska pork producer. Thus, China apparently wants to avoid the mistakes made by Japan, South Korea, and Taiwan.
The cost of producing pork in China currently is higher than the cost of producing pork in the United States. By virtue of the subsidies provided to its pork industry, China has been able to suppress the demand for imported pork smuggled into the country and maintain its ability to export pork. If China were to continue to block pork imports and, instead tried to keep pace with expanding domestic demand through domestic production, Chinese pork prices would be much higher than would otherwise be the case. Further, Chinese subsidies and investment in agriculture would keep capital from flowing to more efficient and remunerative uses. The costs of this misallocation would increase over time as China tried to extract more and more pork from a limited source of supply. In time, China, like Japan and Korea, would be forced to import pork to reduce prices.
China's Ban on Pork Imports Remains in Effect
High tariff rates and a discriminatory value added tax put imported pork at a sharp competitive disadvantage to domestic pork. Moreover, complicated and non-transparent restrictions on imported pork, administered by China's State Administration of Inspection and Quarantine (SAIQ) - which recently replaced it's quarantine administration CAPQ - make it virtually impossible to import pork. SAIQ contends that Chinese restaurants and hotels can obtain licenses to import pork. Unlike beef, for which licenses are available through regional SAIQ offices, SAIQ says that it disseminates pork import licenses solely through SAIQ headquarters. In reality, very few licenses have been granted by SAIQ to hotel and restaurant importers.
In 1997, SAIQ provided quotas to 11 establishments in Australia, Canada, and the United States as eligible to export meat and poultry to China for general consumption under a one year "pilot program." While in one sense this was a positive development because, as a matter of law, these imports are not limited to the hotel and restaurant sector, as a matter of fact, high tariffs and other restrictive measures kept a tight lid on imports.
Under the pilot program, the qualified establishments include a pork facility in Australia that received a quota of 2,000 MT, three pork facilities in Canada that received a total quota of 68,000 MT, and one pork facility in the U.S. that received a quota of 5,500 MT. The Australian and U.S. exports must be imported exclusively by Nanjing Five-Star Hotel Corporation Ltd. and the Canadian product must be imported exclusively by Chaoying Foodstuff Ltd. While pork is not on the formal list of state traded products in China, the appointment of these exclusive importers is troubling. Indeed, the U.S. pork industry understands that SAIQ officials are involved with the ownership/management of each of these importers. The pilot program has been a failure due to high duties and taxes, unfair sanitary barriers, restrictions on the number of importers, and competition from smuggled pork imports.
Canadian pork quotas are much higher than U.S. quota levels under the pilot program but Canadian pork must be imported pursuant to the Canada-China pork protocol. Canadian industry officials are extremely upset with this protocol because onerous and non-scientific restrictions will preclude the shipment of any significant amount of pork from Canada to China. The Chinese, supposedly at the behest of the Australians, expressed concern to the Canadians about Porcine Reproductive and Respiratory Syndrome (PRRS). The PRRS virus is endemic to the world and it defies credulity to suggest that China - a country where serious porcine diseases are rampant - does not have PRRS. Further, unlike porcine diseases such as hog cholera and FMD, PRRS is not transmitted through imported meat to domestic swine
Despite official import restrictions, demand from the population for pork, particularly high-quality variety meats (e.g. hearts, stomachs, intestines), is so high that sizeable quantities of imported pork are being smuggled into China principally through Hong Kong. The pork is distributed to the general population mostly through local wholesale markets with a small amount distributed through supermarkets. Technically the importation and distribution of this product is illegal, a fact which is generally acknowledged by the Hong Kong importers and Chinese distributors. In 1998, this trade represented approximately $50 million for US exporters, although the total value of the pork trade with China conducted through Hong Kong is estimated to be as high as US $200 million. (An additional $8 million of U.S. pork was imported directly by China in 1998. Industry sources in China report that even these imports that directly enter China do so on a negotiated basis, not in accord with the official position.) It is difficult and expensive to smuggle pork into China and, without question, pork imports would explode if China lifted its de facto ban. Even under restrictive trade regulations, Chinese demand is so large at times that they have bought the entire world's supply of certain pork variety meats.
Conclusion
The U.S. government has convinced China to lift its de facto ban on imported pork as a condition of entry to the World Trade Organization. In order to become a consistent and reliable supplier of pork, NPPC respectfully urges the Congress to work closely with the Administration to complete the WTO package and extend permanent NTR to China.
The United States is uniquely positioned to reap the benefits of a liberalized Chinese pork sector. The U.S. exported over $1.1 billion in pork in 1998 and exports grew by over 15% in spite of the global financial crisis.
China is surpassing Japan as the single largest source of the U.S. trade deficit. If China liberalized its pork market, the U.S. would be exporting huge volumes of pork to that country. The U.S. pork industry alone could make a significant dent in the U.S.- China trade imbalance.
