Canadian exports of weanling hogs have climbed rapidly since the
mid-1990s. While there are several reasons for the increase, profit is
the most obvious.
The U.S. market for weanlings offered the promise of good returns in
recent years. Last year, Canadian producers shipped more than three
million weanlings there, more than doubling the number exported in 1998.
“They were making very good profits last year selling to the States,”
said Janet Honey, Manitoba Agriculture’s manager of market analysis and
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Manitoba leads the exports of weanlings to the U.S., followed by
Ontario and Alberta.
Besides prices, there were other events driving the trend:
- Some analysts note that expansion of the U.S. hog industry has
cooled, partly due to the challenges of getting sites approved for new
barns. In a bid to find the weanlings it needs, the American hog
industry has increasingly turned to Canada, where expansion of the
industry continues.
- Canada’s currency is valued well below the American dollar, which
adds another incentive for American buyers to look north for supply.
- A study released by the George Morris Centre, an independent
agricultural think-tank in Guelph, Ont., suggested this winter that the
eastern Canadian Prairies was losing its reputation as the world’s
cheapest place to feed hogs. That distinction was shifting to southern
Minnesota, partly because of American crop subsidies.
With cheaper sources of feed, it would make sense for the Americans to
finish hogs while Canadian producers concentrate on raising weanlings.
Some Canadian producers are building barns in the U.S. to finish hogs.
Paul Hodgman, assistant general manager of Alberta Pork, said
operations in Alberta are doing this because of constraints on building
new barns in his province. However, he hopes that will change under the
new process established in Alberta for approving barns.
- Canada has a reputation for producing quality pork. Buying Canadian
weanlings is one way Americans can tap that quality.
Exporting weanlings does have a downside, Hodgman said. It represents
the export of value-added opportunities, since hogs are finished and
slaughtered in the U.S.
“We’d like to see those hogs finished in Alberta,” Hodgman said.
Although they have enjoyed rapid expansion in recent years, Canadian
weanling producers are not immune to market forces and the political
agendas of American politicians.
Profits from exporting weanlings to the United States have dropped this
year, a reflection of the general decline in hog prices.
Also on hog producers’ minds is the latest U.S. farm bill, which
includes a provision for country-of-origin labeling. The provision,
expected to become mandatory in 2004, will mean an animal can be
designated as American meat only if it was born, raised and slaughtered
in the U.S.
The labeling would mean livestock imported from Canada would have to
somehow be segregated from American animals, at least during slaughter.
That would create hassles for the American meat industry and an
incentive to reduce imports of livestock from outside the country.
“Canadian hogs would become a pain in the ass,” said Kevin Grier, a
senior market analyst with the George Morris Centre.
To compensate, he said Canada’s pork industry will have to foster
greater consumer loyalty to meat products branded as Canadian.
