China, Vietnam notable trade prospects for US pet food exporters

This article was originally published in the September 2021 issue of pet food processing. Read it and other articles from this issue on our website September digital edition.

At the start of the year, a new presidential administration took power amid a growing pandemic and a country facing an economic recession. President Joe Biden has made it clear that his administration will address domestic policy issues first, and trade policy later. With vaccination rates rising and states reopening, we’re seeing the fruits of those initial efforts, but where does that leave the US trade agenda and what does that mean for the US pet food industry?

world mapWith the development of pet ownership around the world, US pet food manufacturers are poised to benefit as global market access and competitiveness improve. (Source: © PORCUPEN – STOCK.ADOBE.COM)

While the coronavirus pandemic has certainly affected how pet food manufacturers operate in the United States, it has not diminished the essential role they play in keeping our pets nourished, both at home and abroad. The shutdowns have spurred pet adoptions and the growth of pet food production globally, according to Alltech’s 2020 Global Feed Survey. In fact, it has seen its biggest growth in three years and is one of the few sectors in global feed production to benefit from the COVID-19 pandemic. Global exports of pet food increased more than 15%, with the value of US pet food exports increasing by more than $90 million, or 5.6%, during 2019.

The American Feed Industry Association (AFIA) continues to look for ways to improve US competitiveness and market access for pet food abroad, including prioritizing sticking to China on its recent trade commitments and pursuing new opportunities in Vietnam. AFIA is also urging the Biden administration to renew the now-expired Trade Promotion Authority, which would give the United States strong negotiating power as it looks to expand trade in the future.

China

The number of pets in China was traditionally small and rural but has grown in recent years along with the Chinese economy and per capita income. In the past five years alone, the number of cats and dogs has increased by 79% and 24%, respectively. The Chinese began viewing pets as part of their families, which was facilitated by the government’s liberalization of pet ownership in urban areas.

“Chinese people began to view pets as part of their families, which was facilitated by the government’s liberalization of pet ownership in urban areas.”

This new attitude toward pets has led to increased spending on pet-related goods and services, such as pet grooming, healthcare, and commercial pet foods and treats.

Additionally, the growing awareness of nutritionally balanced, packaged pet foods has modernized attitudes toward pet feeding. Pet food manufacturers have been educating Chinese consumers about the nutritional benefits of complete and balanced pet foods, which has led to an increased demand for these products.

In February 2020, AFIA welcomed the Phase 1 trade agreement between the United States and China, which launched a process that allows imports of pet foods containing ruminant and poultry ingredients, opening the market further to American pet food manufacturers. In the first year of the agreement, US pet food exports jumped 197% compared to 2019 levels. Total exports from January through May 2021 alone were 445% and 136% more than the same periods in 2019 and 2020, respectively.

US Pet Food Exports to China, January-May 2019, 2020 and 2021

As part of China’s agreement to lift the ban on ruminant food, the country also agreed to update its protocol to register existing facilities that export non-ruminant pet food and non-ruminant feed into the country. China agreed to negotiate a separate pet food protocol, updated to include ingredients for ruminants, which came into effect on June 15, 2020.

Going forward, the US remains at a disadvantage in this market due to tariffs on US pet food imports. These tariffs were implemented in response to the Trump administration’s imposition of additional tariffs on imports from China. So far, the Biden administration has signaled no interest in raising existing additional tariffs on Chinese imports, leaving any prospect of China raising tariffs on US imports at bay. AFIA continues to advocate for the United States to resolve the tariff dispute with China, which limits the United States’ ability to truly compete in the Chinese market.

Vietnam

Vietnam is one of the fastest growing economies in Asia, and although it is not a traditional market for pet food, it boasts a real and untapped potential for pet food manufacturers in the near future.

According to Euromonitor, the numbers of dogs and cats in Vietnam increased by 25% and 37%, respectively between 2016 and 2021. Sales of dog and cat food increased by 103% in the same time frame. Rising disposable incomes and pet owners switching from table scraps to pet food led to these increases in Vietnam.

“Now is the time for US pet food manufacturers to look to Vietnam as a real potential growth opportunity.”

The Vietnamese pet food market is where China used to be not so long ago. At a time when there is minimal competition and diversity in the market, now is the time for US pet food manufacturers to consider Vietnam as a real opportunity for potential growth. The country’s love of the American market and products, as well as positive attitudes toward trade, put American pet food manufacturers in an ideal position to educate and market the diversity, efficacy, quality, and safety of American pet food products.

Trade Promotion Authority

Granted by Congress, the Trade Promotion Authority (TPA) gives the president “fast-track” authority for trade negotiations. Simply put, it allows Congress to set the goals of trade negotiations and the president to use those goals to negotiate trade deals; Congress cannot introduce amendments to negotiated deals and can only vote for or against them.

The TPA has been used by presidential administrations since 1974 but, unfortunately, the Biden administration allowed it to expire in July. As trade in the pet food sector continues to grow, the US’s ability to open up new markets depends on its ability to come to the table knowing it can ratify a final agreement. AFIA strongly supports the TPA and encourages the Biden administration to seek its renewal.

Access to global markets and competitiveness

The continued growth in global demand for pet food highlights the importance of AFIA’s work to ensure that the US industry remains competitive in the global market. The United States needs to be able to access markets and expand its presence, which is made possible and backed by negotiated trade agreements, risk-based and science-based standards and protocols. AFIA hopes that new opportunities for American pet food manufacturers loom and will continue to push for American pet food opportunities internationally and advance pet ownership experiences globally through balanced and nutritious diets.

Gina Temparillo is AFIA’s Senior Director of International Policy and Trade.

For more regulatory news affecting the pet food market, visit our regulatory page.

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