If Canada wins the hog anti-dumping case, can Canadian producers expect to return to unmolested trade?
“I don’t think so,” said Iowa State University economist Dermot Hayes, whose economic analysis is being used to support the National Pork Producers Council’s attack on Canadian hogs. The U.S. commerce department will adjudicate the case in March.
No matter how fair or reasonable Canada may claim its farm support programs are, the fact they are different from American programs will cause clashes, said Hayes in an interview.
Read Also
Vegetable oil stocks are expected to tighten this year
Global vegetable oil stocks are forecast to tighten in the 2025-26 crop year, this should bode well for canola demand.
“I think the solution, as an economist, is to have the same grain policies and the same pig policies in both countries,” said Hayes, who believes Canadian hog production is subsidized but American hog production is not.
“We should have tried to ensure that the U.S. and Canada tried to adopt similar policies” when the North American Free Trade Agreement was negotiated.
Hayes’s claim that Canadian hog production is government-subsidized is based on his analysis of provincial farm subsidy programs and Canada-wide whole-farm programs.
He concedes that U.S. corn and soybean production is substantially subsidized, especially by the loan deficiency payment programs. However, he said hog production receives no direct subsidies from the U.S. government.
Canadian producers often describe U.S. hog production as subsidized because the feed grain that is its main cost is cheaper because of the grain programs. Manitoba hog producers have often complained that hog feeding should be cheaper in Manitoba than in Iowa, but U.S. grain subsidies have given the advantage to Iowa. They also say U.S. subsidies have caused hog feeding to grow in Iowa and pushed Manitoba hog producers to concentrate on sow production, which is less affected by the feed price disadvantage than feeder production.
Hayes said Manitoba hog producers may suffer a small basis disadvantage on feed grain prices, but overall, the subsidized feed grains flooding the U.S. heartland should also depress Canadian feed prices, which helps Canadian hog producers’ costs.
Canadian hog producers are subsidized right now, Hayes said, because of whole-farm programs that give them $7 or $8 for every $100 of output. American producers do not receive any whole-farm program payments.
An Iowa farm that has both grain production and pig production may receive subsidies on the corn and soybeans, but the pigs are not subsidized, and that is why the American producer feels he is facing unfair competition from Canadian pigs.
“Most producers down here make decisions on each of their enterprises as individual units,” said Hayes.
“If a corn-soybean producer with pigs is deciding whether to stay in pigs next year, he doesn’t take into account the profits or subsidies on corn and soybeans when looking at pigs. … You have to think of them as two separate entities, as the pig producer does.”
Hayes said whole-farm support programs continue to promote sow barn development in Canada because they even out producers’ revenues. That gives them an advantage over American producers who have to take on heavy financing without any safety net.
Hayes said trade disputes like the present one are natural when two trading partners are following different rules.
Whether the policies are designed to be unfair isn’t the point. The economic effect is the only issue.
“If Iowa has $1 more profit than Illinois, you can bet Iowa will grow a lot more hogs than Illinois in the long run, because $1 in the long run is a lot,” said Hayes.
He said U.S. pig producers aren’t sympathetic to arguments that Canada’s programs are an attempt to be less trade distorting than programs such as the U.S. loan deficiency payments.
