Factory farming’s reliance on access to global markets means disruptions in access to these markets can have serious negative financial consequences for producers, processors, and distributors.
Causes of trade disruption include: import restrictions or bans, trade embargoes and tariffs, import or export licensing requirements, currency fluctuations, adverse shifts in political or regulatory policies, changes in tax laws that may render earnings subject to additional withholding requirements and/or taxes upon repatriation, and interruptions in shipping or the reduced availability of freight transportation. In addition to hindering or halting export activity, disruptions in access to international markets can also negatively impact domestic prices for factory-farmed meat, dairy, seafood, or eggs by creating an oversupply.
Major factory farming conglomerates routinely warn investors of the risks associated with trade disruption. In its 2019 10-K filing, Hormel listed the “global trade environment” first among the “largest threats to the Company’s profitability.” African swine fever (ASF) and market volatility ranked second and third, respectively. Tyson advised in its 2019 annual filing that despite a 6 percent increase in sales over 2018, the company was “[c]urrently...experiencing impacts to domestic and export prices across all of our segments resulting from uncertainty in trade policies and increased tariffs.”
Trade wars wreak financial havoc on factory farming operations
Between 2010 and 2020, a series of international trade disputes have diminished the financial performance of major factory farming operations.
Beginning in early 2010, the Chinese government announced it would impose “anti-dumping” laws on U.S. chicken products. Instituted against the backdrop of ongoing trade disputes with the EU and the United States, China’s restrictions imposed tariffs of 43.1% on Tyson’s products, 80.5% on Pilgrim’s Pride’s, and 64.5% on Sanderson Farms’. According to Sanderson’s 2019 10-K filing, the levy on its products climbed to 70.6%. The U.S. government filed a challenge to the anti-dumping restrictions with the World Trade Organization (WTO). In 2013, the WTO ruled in favor of the U.S. Despite this, however, China’s anti-dumping tariffs remained in effect until 2018.
Animal-disease outbreaks routinely disrupt factory farming operations’ access to global markets. Even producers whose livestock are not diseased face import bans and subsequent losses in the form of decreased international demand and increased domestic supply, each of which can negatively impact market prices and diminish short and long-term financial performance. In 2015, an outbreak of Highly Pathogenic Avian Influenza (HPAI) resulted in the disease-related deaths or culling of approximately 50 million birds on 200 farms in 21 states. The outbreak had a negative material impact on all U.S.-based poultry and egg producers, including those whose flocks had not been affected by the virus, when China, Japan, Mexico, Saudi Arabia, South Korea, and other countries halted $6B worth of collective annual imports of U.S.-produced poultry products and eggs and sent international demand and market prices tumbling to historically low levels. Some of these import bans remained in place for years. The last, China’s, was not lifted until November 14, 2019.
U.S. trade policy is putting American factory farming operations at risk
During recent years, U.S. trade policy has negatively impacted factory farming operations’ access to international markets. Since Donald J. Trump took office in early 2017, he has imposed tariffs on imports from China, Mexico, Canada and other countries in addition to advocating for greater restrictions on free trade. In response, several countries have levied retaliatory tariffs on tens of billions of dollars’ worth of U.S. goods. These tariffs have significantly negatively impacted U.S.-based meat, dairy, and seafood producers, including Tyson. The company faced an estimated 25 percent lower profits in 2018 because of the tariffs’ negative impact on the prices of domestic and exported food products, particularly chicken and pork.
Footnotes and Sources
 Hormel Foods Corporation, 10-K for Fiscal Year Ending October 27, 2019, accessed June 15, 2020, https://www.sec.gov/ix?doc=/Archives/edgar/data/48465/000004846519000057/hormel201910k.htm.
 Tyson Foods, Incorporated, Form 10-K for Fiscal Year Ending September 28, 2019, accessed June 10, 2020, https://s22.q4cdn.com/104708849/files/doc_financials/2019/ar/dcdf2f5b-689d-4520-afd6-69691cf580de.pdf.
 Reuters, “UPDATE 3-China to levy anti-dumping duties on US chicken,” February 4, 2010, accessed June 22, 2020, https://www.reuters.com/article/china-us-chicken/update-3-china-to-levy-anti-dumping-duties-on-us-chicken-idUSTOE61402H20100205.
 Sanderson Farms, Inc., Form 10-K for Fiscal Year Ending October 31, 2019, http://ir.sandersonfarms.com/static-files/dd7be81d-df8a-4e22-b267-89cc6e9dcc89.
 Office of the United States Trade Representative, “World Trade Organization Adopts Report Ruling in Favor of the United States in Chicken Products Trade Dispute with China,” September 25, 2013, accessed October 6, 2020, https://ustr.gov/about-us/policy-offices/press-office/press-releases/2013/september/WTO-ruling-favor-US-chicken-China; Reuters, “China Drops U.S. Broiler Chicken Import Duties Amid Growing Trade Tensions,” February 26, 2018, accessed October 6, 2020, https://www.reuters.com/article/us-usa-china-chickens/china-drops-u-s-broiler-chicken-import-duties-amid-growing-trade-tensions-idUSKCN1GB0BD.
 Food Safety News, “Highly pathogenic avian flu in SC turkey flock is no threat to human health,” April 15,2020, accessed June 15, 2020, https://www.foodsafetynews.com/2020/04/highly-pathogenic-avian-flu-in-sc-turkey-flock-is-no-threat-to-human-health/.
 Congressional Research Service, “Update on the Highly-Pathogenic Avian Influenza Outbreak of 2014-2015,” July 20, 2015, accessed June 10, 2020, https://fas.org/sgp/crs/misc/R44114.pdf.
 Jacqueline Varas for American Action Forum, “The Total Cost of Trump’s Tariffs,” June 2, 2020, accessed June 22, 2020, https://www.americanactionforum.org/research/the-total-cost-of-trumps-new-tariffs/.
 Scott Lincicome for the Cato Organization, “Here Are 202 Companies Hurt by Trump’s Tariffs,” September 14, 2018, accessed June 24, 2020, https://www.cato.org/publications/commentary/here-are-202-companies-hurt-trumps-tariffs.