Canada’s hog and pork industry is in crisis, reeling from the impact of a high dollar, disease, declining competitiveness, falling exports and profits, tougher export competition and declining domestic consumption, industry leaders said last week on Parliament Hill.
“I want to be very clear and very, very straightforward,” Ontario producer Clare Schlegel, president of the Canadian Pork Council, told MPs Nov. 23. “This industry is in the early stages of crisis and it’s going to get worse before it gets better.”
He said the 40 percent escalation in the value of the Canadian dollar during the past four years has cost the average producer between $30 and $40 per pig.
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On the packer side, Maple Leaf Foods vice-president Rory McAlpine told the same House of Commons agriculture committee meeting that the soaring dollar has hit export margins and plant usage because of lower sales.
“For Maple Leaf, we have estimated that the impact solely of these currency related changes has been $100 million a year for the last three years in our earning situation,” he told MPs.
Paul Beauchamp, senior vice-president at Olymel, said his company also has suffered declines in revenues because of the stronger dollar and the fact that most Canadian pork is exported.
The result has been packer restructuring and reduced marketing opportunities for producers in many parts of the country, including in Saskatchewan where Maple Leaf recently announced plant closure in Saskatoon, as well as sale of plants in Ontario. In Nova Scotia, Maple Leaf is reconsidering the future of a plant.
It was a jarring presentation of problems from an industry that has been one of Canadian agriculture’s success stories for more than a decade. While incomes have been cyclical during the period, the industry grew at a frantic pace.
Exports increased from 300,000 tonnes in the mid-1990s to more than one million tonnes last year. Canada became the world’s second largest exporter after the European Union with sales last year worth $2.8 billion.
McAlpine said it was explosive growth fuelled by elimination of the Crow rate in 1995, deregulation, genetic improvements and a devalued Canadian dollar that made exports cheaper.
But now, a litany of problems has combined to end the growth bubble. The herd is shrinking this year after a dozen years of growth, exports are slipping and the balance of pork trade with the United States, which once was heavily in Canada’s favour, is narrowing.
- In Quebec and Ontario, a virus has led to the death or slaughter of hundreds of thousands of pigs, with losses in the tens of thousands of dollars for many affected farmers.
- The U.S. has displaced Canada as the world’s second largest exporter and has increased sales into Canada. Meanwhile, Canadian pork consumption has been falling.
- With Canadian plants just one-quarter the size of the largest new American plants, the Canadian processing sector is falling behind.
- Delays in Canada’s drug regulatory system continue to keep Canadian producers at a disadvantage.
- Labour shortages, particularly in the West, make it difficult to keep a trained workforce in the plants.
The industry leaders said that while it is up to them to make most of the adjustments to combat the problems, governments also should intervene with drug regulation reform, more flexible foreign work rules, more aggressive investment in research and pursuit of trade liberalization deals.
