Washington - The U.S. pork industry is urging the Agriculture Department not to devote more GSM-102 credits for feed grain sales to South Korea, saying that the agency's huge allocations for feed grains are hurting U.S. meat producers.
According to a document pork industry aides are passing out to USDA officials that was obtained by Reuters on Wednesday, U.S. pork producers are concerned that extending a large amount of GSM-102 for feed grain sales is helping meat producers in South Korea, the document said.
South Korean producers are using the feed grains to help their own production and then are selling a large amount of meat to Japan, the largest market for U.S. pork and beef exports, the industry memo said.
"The Korean government wants GSM for U.S. feedgrains to prop up its livestock sector," the document said. "The U.S. pork industry, which is hemorrhaging both at the producer and packer level, will lose further market share in Japan (if additional GSM credits are added for feed grains)."
The document said government and industry officials in Seoul have said they hope to double current pork exports to Japan within three years.
"A crisis is looming for the U.S. pork industry in Japan," the document said. "The U.S. government must not help Korean livestock producers because it will come at the expense of U.S. livestock producers and packers."
The pork industry document also said that not allocating additional South Korea GSM-102 credits for feed grains will not hurt producers of those goods, since the success of the U.S. feed grain industry is dependent on a strong domestic meat industry, which buys a large portion of U.S. feed grain.
"The U.S. livestock industry does not import feedgrains," the document said. "Increased U.S. meat exports necessarily result in increased U.S. feedgrain sales."
The USDA is expected to announce sometime in the next several weeks that it will add more GSM-102 credits for sales to South Korea. The meat industry has asked USDA for another $400 million in GSM-102 for meat sales to South Korea.
The department originally allocated $100 million for meat, which was quickly exhausted. Of the $100 million, $13 million went for pork sales and $87 million went for beef.
The USDA has allocated $350 million for GSM-102 sales of U.S. animal feed to Seoul. Of that, $201.1 million had been registered by U.S. exporters as of Friday.
A total $1.1 billion in GSM-102 credits for South Korea has been allocated thus far. All but $100 million has been released for use by U.S. exporters. The meat industry is actively lobbying that the remaining $100 million be devoted for meat credits.
U.S. beef and pork producers have been plagued this year by falling exports due to the Asian economic crisis and rising production -- a combination that has significantly depressed prices.
Meat Industry Insights News Service
P.O. Box 553
Northport, NY 11768
Phone: 631-757-4010
Fax: 631-757-4060
E-mail: sflanagan@sprintmail.com
Web Site: http://www.spcnetwork.com/mii