Prices linked Retaliatory tariffs on U.S. imports won’t help Canadian pork producers, says analyst
Hog farmers shouldn’t expect trade retaliation to give them a big payback for the damage caused by country-of-origin labelling, says a hog market analyst.
Tyler Fulton of Hams Marketing, which markets hogs for Manitoba and Saskatchewan farmers, said punitive levies placed on American pork imports will likely hurt U.S. producers, but that won’t necessarily make things better for Canadians.
“It will inevitably be to the detriment of Canadian producers,” Fulton said.
“I don’t think some of the organizations understand how much the Canadian price is really a reflection of American prices.”
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Federal agriculture minister Gerry Ritz has released a list of American products Canada would like the World Trade Organization to approve if retaliatory measures are approved. American pork is on the list.
The United States lost a WTO challenge on COOL launched by Canada and Mexico and was given time to fix the law and make its provisions non-trade discriminatory. However, when the U.S. Department of Agriculture released its planned changes, critics both outside and inside the U.S. said the changes would make the situation worse and likely justify trade retaliation.
The WTO has not ruled on whether Canada and Mexico can retaliate, but Ritz released a list of target products Canada would like to see approved, including pork.
Much pork flows across the border, with each country supplying much of its pork production to the other nation’s consumers.
Some hog producers have said they think duties, tariffs or other charges placed on U.S. pork will help Canadian farmers because it will create more demand for Canadian pork in Canada.
However, Fulton said it might be easier for farmers and the pork industry to move product within Canada if U.S. pork imports become more expensive, but there won’t likely be a sudden massive shift.
“These changes in trade flow don’t happen quickly,” said Fulton.
However, pork prices could fall quickly if a decline in sales to Canada causes U.S. pork to back up in the American domestic market.
“It will need to be cleared to other (export) markets or within the U.S. domestic market,” said Fulton.
Susceptibility to weak exports was seen this spring when lean hog futures slumped after Russia and China imposed controls on U.S. pork produced using ractopamine. The U.S. market relies on a big export program, so anything that threatens overall U.S. exports could depress U.S. prices, Fulton said.
Canadian domestic prices are based on U.S. prices, he added, which means falling U.S. prices would likely drag down Canadian prices, even if it was easier to market Canadian pork within the domestic market.
The threat of Canadian and Mexican retaliation for COOL hung over the World Pork Expo in Des Moines, Iowa, even though COOL was not a major subject of discussion at the international hog industry event.
Market analyst Steve Meyer, who opposes COOL, told American farmers that retaliation probably won’t hurt the market this year, but it could go into effect next year and cause problems.
He said he hoped Canada and Mexico wouldn’t retaliate, but doubted the aggrieved nations would resist the temptation to hit back at the U.S. pork industry.
“I’ve told people in Canada, a lot of us were on your side,” said Meyer during the Expo.
