Regardless of whether the U.S. government hits Canadian hogs with penalties this month, Canadian hogs and pork will continue to flow south, say analysts.
The balance between the amount of pork that goes south as live animals and as meat may be shaken slightly, but overall trade should be the same.
“I don’t think you would see a big change in the flow of hogs,” said Manitoba Pork Marketing Co-operative manager Perry Mohr.
If a penalty is imposed, hog trade wouldn’t radically change for a few months, he predicted, but after that some hogs may start to be fed out in Canada. That would probably happen slowly and the pork would end up exported south anyway.
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Ron Plain of the University of Missouri said total pig and pig products trade won’t likely fall.
“If we put a tariff on hogs coming south, it just means an increase in the amount of pork coming south,” said Plain.
“We expect the result (of any penalty on live hog imports) would be fewer hogs coming south and more pork coming south and less pork going north,” said Plain.
This year, U.S. pork exports to Canada are up by 25 percent, Plain said, which is a huge increase.
“I think the reason is the huge number of pigs coming south,” he said.
Mohr said feeding more hogs in Canada is not as easy as it sounds. This year has been profitable, but the two previous years were not, and financing new nursery and feeder barns would not be easy.
“The financial institutions would really, really have some challenges levering money for that kind of thing,” said Mohr.
“Even if we could finish them here, where could they be slaughtered?”
Olymel in Red Deer has announced it wants to soon begin a second shift at its hog kill plant, but slaughter capacity expansions tend to occur slowly, said Mohr.
Maple Leaf Foods in Brandon also wants to move to a second shift, but the company has said it would take months to implement once a second shift receives environmental approval.
This has been a good year for hog prices even though pig sales and pork production have surged. Records have been set for the number of hogs slaughtered in the United States and yet prices have kept rising.
Recent U.S. Department of Agriculture statistics show the U.S. sow herd continuing to grow.
Fortunately, booming demand has managed to eat up the expanding pig herd and “we cannot be sure demand has peaked for pork at this time,” said Plain.
But the likelihood of perpetual demand growth is limited and for that reason, he recommends that producers not expand herds.
The North American pig industry is in the middle of a four-year price cycle, Plain said. Demand will likely slow next year and in 2006 pig supplies may outstrip demand, creating the fourth-quarter price plunge that ends each four-year cycle.
“There’s probably good reason to worry about 2006,” Plain said.
Mohr said prairie farmers have had a tough time in recent years, with fewer profitable periods than most American producers, but now that feed grain prices have fallen, Canadian producers are much more profitable.
Exporters of pigs and pork are now being hit by the surge in the Canadian dollar’s value, but Mohr hopes cheaper feed grains will offset some of the losses. In recent years Canadian producers have had to import U.S. corn to feed cattle and hogs, and that has undercut profitability.
“There will certainly be an abundance of feed available this year,” said Mohr.
