Pork producers on both sides of the Canada-United States border feel caught-in-the-middle of escalating world trade tensions.
Neither side sees much to gain and sees lots to lose if the North American Free Trade Agreement dies or if a trade war breaks out between the U.S., one of the world’s biggest exporters, and China, the world’s biggest pork consumer.
“It creates a ripple effect all over,” said Canadian Pork Council chair Rick Bergmann at the Manitoba Pork Council annual meeting April 5.
“It creates disruption.”
A delegation of Iowa and Minnesota hog producers attended the conference, as one does most years, and they sounded keen to keep Canada-U.S. pork integration strong.
Drew Mogler of the Iowa Pork Producers Association echoed the sentiments of a large proportion of the U.S. hog industry in saying he hoped NAFTA would get settled without disrupting the market.
“With NAFTA and some of these other trade agreements, we recognize that there might be some areas in that agreement where we can do some modernizing, but we have been sending very strong messages to the negotiators and out of Washington that the agricultural part of that agreement is beneficial for both the U.S. and Canada, as well as Mexico,” said Mogler.
“Let’s leave that. Let’s not do any harm.”
Bergmann said a China-U.S. trade war would have unpredictable results for Canada’s industry.
“It does not stop pork from moving,” said Bergmann.
“There’s going to be displacement and some chaos.”
Some have speculated that Chinese tariffs on U.S. pork would lead to more sales of Canadian pork to China, and therefore better prices in Canada, but both Bergmann and Manitoba Pork Council manager Andrew Dickson highlighted the reality of Canadian pork prices being based off U.S. prices. If U.S. prices fall, Canada’s prices will probably fall with them.
Some economists have predicted that Canadian exports of pork to China will increase, but that could cause more U.S. pork to flow into Canada.
Bergmann said Canada’s export prospects are improving because of the Trans-Pacific Partnership, which is giving Canadian pork better access to Japan and Vietnam.
However, building up those alternatives to the U.S. market is as much a defensive move as much as an improvement in Canada’s prospects.
“It’s not an option. We have to keep developing markets,” said Bergmann.
Mogler said the U.S. herd is expanding faster than it usually does during growth periods, but new packers in Iowa, Michigan and Minnesota are preventing a surplus of pork to develop.
He hopes Canada-U.S. hog industry integration continues and is not derailed by tension over NAFTA.
“We need each other. We need to continue to foster that relationship and grow it. We really do depend on each other for our industries,” said Mogler.