BANFF, Alta. – Becoming the world’s largest pork exporter outside the European Union has made the Canadian industry vulnerable because so much is dependent on volatile foreign markets, says an American economist.
“Exports are great, but it adds risk,” said Ron Plain of the University of Missouri at the annual Banff Pork Seminar.
“Canada is probably in the most vulnerable situation in the world because you export such a huge chunk of your production,” he said.
In the last five years Canada grew into the fastest growing hog producer in the world. Every $14.17 earned on the sale of a market hog came from the export market.
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Canada exported pork to more than 75 countries in 2002. Figures from 2001 showed export values of $2.2 billion and almost 719 million kilograms.
“In essence you have 42 percent more sows in this country than you need if you only want to feed Canadians,” he warned.
An example of that vulnerability is the experience of Taiwan’s hog industry. It was a major exporter until 1998, but its entire market disappeared when foot-and-mouth disease was diagnosed.
“The health status of your herd is crucial,” Plain said.
The United States remains Canada’s best customer. Japan, Australia, Mexico, Russia, Hong Kong, Cuba, South Korea and China are other major buyers, taking a variety of cuts so all parts of the hog are more profitable.
The prices paid to producers per hog have been falling since the 1970s. Producers and packers are getting a smaller share of the consumer’s dollar. Most of the money is made in branding higher value products and at the retail level.
Part of the lower price trend is due to the improved productivity of the sow. Cost of production is lower and producers and their pigs are more efficient. Each female is weaning more live pigs at a heavier weight.
Canadian production has not slowed as much as expected in this part of the hog cycle because exports propped up the industry.
Live exports
Besides pork, Canada exports lots of live pigs. More than five million weaner pigs left the country for the American Midwest where feed is cheap and plentiful. For example, in October 2002, more than 400,000 feeder pigs left Canada.
Plain holds little optimism for better prices in the near future.
He predicts American hog prices will range between $37-$40 US a hundredweight, and profits are unlikely.
Canadian prices will range between $1.64-$1.82 per kg.
