When the United States imposed a countervail duty on the Canadian hog
industry in 1989, producers lamented they had grown too dependent on
the Americans.
“In the early ’90s more than 75 percent of exports were going to the
States. Now it is less than 50 percent,” said Jacques Pomerleau of
Canada Pork International, established in 1991 to pursue a more
diversified customer base.
“You don’t want to be hostage to one market.”
Martin Rice of the Canadian Pork Council agreed: “The duty had the
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effect of shaking the industry into the collective agreement that we
were too dependent on the U.S.”
The countervail challenge on pork was resolved in 1991 and the live hog
duty ended in 2000. Rice said it cost the industry between $5 million
and $10 million in duties and legal fees, not to mention a lack of
confidence in the Canadian hog market.
Since the formation of CPI, Canadian pork exports have tripled, and
pork is sold to 90 countries. Canada is one of the world’s top three
pork traders alongside Denmark and the U.S. However, sales between
European Union countries are not considered exports.
Export markets take more than 45 percent of Canadian hog production,
which totalled approximately 26 million animals in 2001.
While most of that is pork, a growing trade in feeder and weaner pigs
has emerged. It is estimated four million weanlings will end up in the
American Midwest this year. Manitoba contributes the lion’s share of
the live hog trade, sending 1.5 million weanlings out of the country
last year.
Nationally, seven million hogs were killed between January and April
2002, a 15 percent increase over the same period last year.
Canada accounts for only two percent of the world’s pork production,
but exporters have developed a good reputation for providing high
quality pork to a diverse marketplace.
“It is not a commodity market, so you have to cater to the specific
needs of your customers,” Pomerleau said.
Statistics Canada reported 717,000 tonnes of pork exports last year.
The Canadian Food Inspection Agency reported 880,000 tonnes, basing its
figures on the number of export permits it issued.
“We tend to believe CFIA because everyone needs an export permit, ”
Pomerleau said.
While the U.S. still buys a large share of Canadian production, Japan
has also become a major customer, taking 20 percent of Canadian
exports. In 2001, it bought 200,000 tonnes of mostly high-end products.
Other markets continue to be strong.
Australia is the third-largest market in value, but not volume. New
Zealand is also a prominent customer. However, there is a glitch in
those markets. Australia and New Zealand accept only cooked product in
an attempt to keep out the virus that causes porcine respiratory and
reproductive syndrome. The fresh chilled product is sold to processors,
which cook it to 65 C.
Mexico has grown into Canada’s third largest customer overall.
“It will only increase because all the tariff rate quotas and tariffs
will be eliminated (in 2003),” Pomerleau said.”We expect significant
volumes to move.”
Other emerging markets include Russia, Cuba, Poland, the Philippines,
Haiti and China.
Pork producers are dubious about ever reaching the European Union
consumer. While European officials insist that Canadian plants must
meet their standards, Canada continues to negotiate for equivalency in
standards.
“They are working at their own pace, which is slower and slow,”
Pomerleau said.
Brazil is a potential competitor for market share. Last year it shipped
300,000 tonnes of pork to Russia.
Brazil is banned from many major markets because of ongoing disease
problems in some parts of the country.
“If they are successful in getting regionalization, they could hurt
us,” Pomerleau said.
Chile is another contender. It already has a healthy pig herd and good
infrastructure. It could snatch away the Australian market.
Unforeseen events like the terrorist attacks in the U.S. last fall
pushed down markets temporarily, said Janet Honey, livestock analyst
with Manitoba Agriculture
“Last fall after Sept. 11, the economy took a dive and we thought Japan
would not buy as much pork,” she said.
However, when bovine spongiform encephalopathy was diagnosed in a
Japanese dairy cow, consumers quickly rejected beef and switched to
pork.
Market access is another serious challenge. Recent country-of-origin
labelling legislation passed in the U.S. demands all product must be
born, raised and slaughtered in the U.S. to carry the U.S. Department
of Agriculture quality stamp.
“We are focusing on things that could cause those regulations to not
become mandatory,” Rice said.
The pork industry is not afraid to promote the Canadian identity in the
American market, but hopes those favouring country-of-origin labels
realize the potential costs in distinguishing between products in the
retail case.
The labelling law could also harm trade in live hogs to the Midwest for
feeding and slaughter.
Country-of-origin requirements already exist in Japan, where
considerable resources are devoted to labelling and promoting Canadian
product.
The industry is concerned Japanese retailers might decide to select
only one or two foreign suppliers.
The Japanese requirements are costly, but no one wishes to sacrifice
such a major market.
“Our volumes are such we would have to find alternative markets for
this large volume of pork,” Rice said.
Even with these gathering storm clouds, expansion has continued in the
Canadian hog herd, especially on the Prairies.
Manitoba is a major force in the Canadian pork industry, producing 22
percent of the country’s exported pork – 167 million kilograms worth
$518 million.
A major boost for Manitoba was the opening of Maple Leaf’s processing
plant at Brandon, which draws in additional hogs from Alberta and
Saskatchewan.
The province killed 4.15 million hogs in 2001, of which 3.3 million
were home grown.
“Hogs are the most valuable commodity by far in Manitoba,” Honey said.
Hogs produced in the province last year were worth $850 million,
compared to cattle at $525 million and wheat at $345 million.
Hog markets can be volatile, and prices could dip if more people go
into the business.
However, Honey said more Manitoba producers now produce pigs on
contract, which should provide some protection.
Alberta is making progress as an exporter as well. Pork exports were
worth $217 million to the province last year, more than 21/2 times the
value of pork exported in 1991. About two-thirds of Alberta pork is
eaten outside the province.
Saskatchewan produced 1.9 million pigs in 2001 and exports 70 percent
of its production. Saskatchewan produced 10 percent of Canadian hogs
last year.
World consumption of pork varies widely. Canadians eat about 32 kg per
year, while the Danes eat 76.5 kg. Mexicans eat nearly 12 kg per year
and the Japanese eat 17.2 kg.
