LITTLE ROCK — U.S. agriculture exports will grow by $1.8 billion every year under a bilateral trade agreement with South Korea that took effect Thursday, the U.S. Department of Agriculture said.
The agricultural part of the pact will produce sales for companies that are able to access the export market, such as Tyson Foods Inc. of Springdale.
The U.S. meat industry has been slowly regaining its share of South Korea’s lucrative beef imports. The country banned U.S. imports in 2003 because of concerns over mad-cow disease but then allowed limited imports until another agreement was achieved five years later.
In 2011, U.S. exporters made about $206 per beef cow and $55 per hog, said Jim Herlihy, a spokesman for the Denver-based U.S. Meat Export Federation.
And more pork than beef was sold, in part, because South Korea had to rebuild its hog supply after an outbreak of foot-and-mouth disease in 2010 and early 2011.
Under the new agreement, duties on certain beef cuts immediately fall to 37.3 percent from 40 percent, and fall 2.7 percent in each succeeding year until 2026, when they expire all together, the U.S. Meat Export Federation said.
Pork and chicken duties are also phased out under similar time frames.
“What we’re expecting is that lower duties on our exports will give us an advantage,” said Herlihy, assuming the savings from buying lower-priced meat will be passed along to South Korean consumers, who eat more pork than beef on a per capita basis.
Lower-priced meat makes “us more cost competitive and encourages higher levels of exports,” he said.
The United States’ main competitor for South Korea’s beef market is Australia, which supplies half of South Korea’s market.
South Korean beef producers supply 41 percent of their country’s market, the federation said.
“There certainly is an opportunity for imported product,” Herlihy said.
As of January, Arkansas ranked 18th in the nation for cattle production with a total inventory of 1.67 million head. Hog production for the state ranked 28th with 107,000 head as of December, according to USDA data.
The new trade agreement, however, affects more than just red meat and poultry.
Sales of grain, oilseed, fiber, fruit and vegetable products also have been included in the USDA’s estimated $1.8 billion export figure.
Total agricultural exports during the October through December period represented sales of $36.39 billion, or about 10 percent of the country’s total exports of $380.4 billion during the quarter, according to USDA and U.S. Commerce Department data.
Gary Mickelson, a spokesman for Tyson Foods, wrote in an e-mail that the world’s largest meat production company “would rather not speculate how much the new trade agreement might benefit Tyson Foods.”
The company has logged mulitmillion-dollar sales of beef, pork, poultry and prepared foods from its relationship with South Korea.
Tyson Foods, in the past, has said it’s been pleased with the trade agreement.
South Korea is slightly larger than the state of Indiana and represents the United States’ fifth-largest agricultural export market, and its fourthlargest market for U.S. beef exports, federal government data show.
Expansion of the South Korea agreement could lead to better access to other Asian nations’ markets, U.S. Agricultural Secretary Tom Vilsack told Bloomberg Television on Thursday.
The 2007 negotiated agreement languished in Congress until October when it was signed with separate trade pacts for Panama and Colombia.
The South Korean trade agreement won full support from Arkansas’ Congressional delegation.
Other state industries expected to experience trade benefits include chemical manufacturers, which represented the lion’s share of South Korean exports on a percentage basis, International Trade Administration data for 2008-2010 show.
Manufacturers of food and kindred products, paper, and electrical equipment, appliances and components are also likely to benefit.
Business, Pages 25 on 03/16/2012