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Without Russia, government must help establish new pork markets

The sanctions came in one fell swoop.

Prime minister Dmitri Medvedev announced Aug. 7 that the Russian border was closed, effective immediately, to any imports of beef, pork, fish, dairy products, and fruits and vegetables from Canada, the European Union, the United States, Australia and Norway.

The retaliatory sanctions, imposed following a presidential decree Aug. 6 by Vladmir Putin will be in place for one-year, Medvedev said.

The news was met with a pointed statement from Canadian agriculture minister Gerry Ritz. He warned the sanctions would backfire, hurting Russian consumers more than Canadian producers.

“Today’s sanctions show short-sighted desperation from the Putin regime, and negatively impact the citizens of Russia far more than Canadians,” Ritz said.

He added that Ottawa “will continue to put Canada’s national interests first, but we cannot allow business interests alone to dictate our foreign policy.”

Canada’s farming community, while discouraged, admitted they knew Russian sanctions against their industry were possible.

After all, Canada is the third largest supplier of pork to Russia with exports in 2013 valued at $260 million. Canadian beef exports are minimal, with shipments last year valued closer to $2 million.

The shuttered border does not bode well for a pork industry still struggling to get back on its feet.

Talk to any hog producer, and they’ll likely tell you the past seven years haven’t been easy.

From swine flu scares to high corn prices, trade disputes with the United States over mandatory country-of-origin labelling, a strong loonie and being shut out of the lucrative South Korean market, it’s been a tough few years for Canadian pork.

While Canada has finally reached a trade agreement with South Korea, it has yet to be passed by parliament and is not expected to be in place until sometime in 2015.

Add to that the virulent outbreak of porcine epidemic diarrhea virus in the United States and parts of Canada and it’s truly amazing there are still people who want to raise hogs.

Losing the Russian market — a customer for whom producers spent the last year changing their on-farm practices to avoid the use of the feed additive ractopamine — is yet another blow, one that could have an impact on pork prices around the world.

Prices were finally starting to rise, thanks in part to smaller herds in the United States and surging demand from foodies looking for bacon.

Remember, the EU and the U.S. are both large hog producing nations. With their access shut off, there are a lot of pork producers and packers looking for new customers.

With the largest pork demand coming from southeast Asia — a region many stakeholders argue Canada has yet to truly capitalize on — competition could become even more fierce.

But Russia’s sanctions don’t just pack an economic punch. There are political consequences too.

Domestically, the federal government must ensure the country’s pork industry alone does not bear the brunt of Canada’s foreign policy.

Most Canadians, including pork producers, would agree the federal government could not sit back and do nothing given the situation unfolding between Russia and Ukraine.

Still, it is safe to say most Canadians also expect their government to ensure certain hog farmers aren’t hung out to dry.

The last point is particularly important given the industry’s margins over the past few years.

While it’s too early to know what the full impact of the sanctions will be, many pork farmers will tell you they don’t qualify for current business risk management programs because of poor margins.

That means if their bottom lines are hit hard, there’s little to no recourse under existing programs. Finding new markets, on both a short- and longer-term basis, is critical.

The Canadian Meat Council has said there are 1,000 shipments of pork, valued at $50 million, headed to Russia that will need to be rerouted.

Thankfully, most of Canada’s shipments to Moscow are of frozen meat with a shelf life of about six months. Government officials must be prepared to help the industry find new customers with similar tastes as Russians before those goods spoil.

International politics has landed on the farm. Given the developments over the past few weeks, it looks like its here to stay.

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