Canada’s pork producers get an A plus when it comes to expanding the industry, reducing production costs and supplying high-quality pork to domestic and international markets, said speakers at an industry meeting in Rosetown, Sask., last week.
However, the industry deserves a failing grade when it comes to managing supplies and ensuring that Canadian pork products have a stable market.
Joe Kleinsasser, chair of the Saskatchewan Pork Development Board, said industry leaders got caught up in expanding the industry but failed to ensure that a larger, more productive Canadian hog sector would have stable markets for its products.
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Kleinsasser dismissed supply management as unrealistic for the Canadian hog sector but said the Canadian industry must regulate its production more carefully to ensure that markets are not flooded with undervalued pork.
“We need to be industry regulated,” said Kleinsasser, one of several guest speakers who attended the producer information meeting Sept. 25.
“When the topic (of oversupply) was raised five, six, seven years ago with industry leaders … it was dismissed as irrelevant,” he said.
“(Industry leaders) felt we would always be able to sell what we produce because we have such a great product.
“They were right. We do have a great product, but we forgot the most basic law of economics, which is the law of supply and demand. No matter how good you are at producing a product, if you can’t sell it at a profit, it does you no good.”
According to figures from Statistics Canada and the U.S. Department of Agriculture, Canada produces only two percent of the world’s pork but it exports between 60 and 70 percent of its annual production.
Brad Marceniuk, a livestock economist with Saskatchewan Agriculture, said heavy reliance on export markets, combined with a relatively strong Canadian dollar, has put the Canadian hog sector in a difficult situation.
According to Marceniuk, U.S. pork producers were shielded from production losses, thanks to a weak U.S. dollar and strong export volumes.
“In 2006 and 2007, when Canada was reducing its herd, they were still expanding their herd,” he said.
“Their numbers just don’t seem to be coming back down.”
Marceniuk said large supplies of inexpensive American pork have undercut Canadian export numbers and continue to weigh heavily on international markets.
In addition, increased production in key importing countries like Russia and China has reduced the demand for North American pork.
China, for example, has expanded its production to more than 46 million tonnes in 2008 from 38 million tonnes in 1998.
The country now produces nearly half of the world’s pork supplies and has been virtually self-sufficient in production for the past four years.
Recently, the Chinese government has begun stockpiling pork to maintain domestic production and has imposed trade barriers to discourage imports of foreign pork from entering the country.
“Everybody’s blaming the H1N1 virus for the reduction in exports but I think a lot of it also has to do with (Russia and China) increasing production,” Marceniuk said.
