More Canadian pigs wind up in American stomachs than in Canadian tummies.
This surprising development that first occurred in 2003 prompted American hog producers to file trade challenges against Canadian hog imports, said Ron Plain, an agricultural economist with the University of Missouri.
In 2003, almost 39 percent of the pigs born in Canada were consumed in the United States, about 37 percent in Canada and 24 percent in other countries.
“The primary thing driving this (trade challenge) from the standpoint of the U.S. hog industry is, you get to the point where you say ‘enough is enough.’ … The fact that Americans eat more pork from Canadian pigs than Canadians do is one that strikes a lot of U.S. hog producers as a bit too much,” Plain told the Saskatchewan Pork Industry Symposium last week.
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American pork producers asked for two challenges, a countervail investigation into whether Canadian hogs were unfairly subsidized and an investigation into whether Canadian hogs were dumped, that is sold at less than the cost of production.
The U.S. Department of Commerce in a preliminary ruling found no illegal subsidization but it did make a preliminary finding of dumping and issued a duty of about 14 percent.
Whether that duty becomes permanent depends on whether the department finds the Canadian imports injured American producers.
Plain and Kevin Grier of the Canadian Pork Market Review disagreed over whether injury would be found.
Plain said almost all growth in the North American sow herd in the past few years has been in Canada. The Canadian expansion and increase in pig exports to the U.S. lowered American producers’ profitability, he said.
But Grier, who is an analyst with the George Morris Centre in Guelph, Ont., said the U.S. hog industry has benefitted from Canadian hogs.
Canadian weaner pigs don’t go to the U.S. because of subsidy, he said. They go because Iowa, with its cheap corn, is a magnet that draws pigs from all over.
“How can you argue that we are hurting your industry when your prices are so profitable?”
Canadian hogs have also helped provide the supply needed for the U.S. to expand its exports into highly profitable markets, he added.
“And I also assume we will say, ‘how can you say we are injuring your industry when you are adding value to those millions of weaners? You are adding the grain, all the jobs in the packing industry.’ “
But it shouldn’t matter whether there was injury, Grier said. The increase in hog exports was because Canada is competitive.
“Are we too export dependant? No. It is basically what we do. We are the largest (pork) exporting country in the world. We are exceptionally competitive.”
However, if the duty does become permanent it will pressure Canadian packers to increase slaughter. The natural way to increase would be to move to double shifts, Grier said.
He is surprised that it has taken major packers like Maple Leaf in Brandon and Olymel in Red Deer so long to add a second shift. He speculated the reason might be an inadequate supply of low cost labour.
Slaughter capacity in Western Canada is now about 180,000 head per week, which means about 25,000 slaughter hogs per week head south. Adding a second shift would increase slaughter to 270,000 per week. Initially the expansion would outstrip the available slaughter hog supply, but Grier said in about a year slaughter capacity would shrink because a smaller plant or two would be put out of business and more feeder pigs, now exported, would stay in Canada to be fed to slaughter weight.
