A record amount of beef, pork, poultry, and turkey - 2.5 billion pounds - is being stockpiled in U.S. facilities, federal data is expected to show, The Wall Street Journal reported.
While U.S. consumers have a growing appetite for meat, that appetite is not increasing fast enough to match the production of hogs and chickens in the U.S. meat industry, so the industry is depending more on exports, the report said.
However, Mexico and China, two of the largest foreign customers for U.S. meat, have set tariffs on pork products in response to U.S. tariffs on steel, aluminum, and other goods. U.S. hams, chops, and livers have become more expensive in those markets, which is slowing down sales, said industry officials.
The U.S. Meat Export Federation projected that U.S. beef exports to China could have reached $400 million in four years, Fortune noted.
The growing stockpiles and the trade risk could cause "one of the biggest corrections we’ve seen in the industry in several years," Christine McCracken, protein analyst at agricultural lender Rabobank, told the Journal.
"The more you store, chances are you’re going to have to export more of it … even with the tariffs, there’s only a certain amount of product you can shift into the domestic channels," Altin Kalo, a commodity analyst with Steiner Consulting Group, told the Journal.
Some producers are scaling back, such as Maschhoffs LLC, a hog-farming company, which is putting on hold $30 million in domestic investment, the Journal reported.
He said that he is considering expanding into eastern Europe or South America, where trade policy is not so “geopolitically charged.”
For operators of cold-storage warehouses, however, the meat stockpile provides opportunities. Zero Mountain Inc.'s Arkansas warehouse is filled with pallets rising near the 40-foot-high ceilings, and has increased wages for forklift drivers, the Journal reported.
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