THIS little piggy went to market, this little piggy stayed home. …
There has been considerable piggy counting going on of late, to the extent that U.S. hog producers on March 5 petitioned their government to file anti-dumping and countervailing duty cases against the Canadian hog industry.
The U.S. National Pork Council and other pork interests accuse Canadian hog producers of receiving unfair subsidies and engaging in unfair pricing practices when selling and shipping their hogs to the United States. The petition is a direct result of increased Canadian live hog exports to the U.S., which are up about 30 percent from 2002. If proven, the case would see duties of five to 20 percent levied against U.S.-bound Canadian hogs, constituting major damage to the industry.
Read Also
Agriculture needs to prepare for government spending cuts
As government makes necessary cuts to spending, what can be reduced or restructured in the budgets for agriculture?
The latest dispute with the U.S. is disappointing but not particularly surprising. Like producers here, American hog producers have had lean years and as they look for places to affix blame, Canada looms large.
It’s the piggies that went to market that are the problem for the neighbours. About 7.3 million pigs headed south for feeding, slaughter or both in 2003.
The reasons for that increase, last year in particular and in recent years in general, are more obvious and less nefarious than the Americans seem to think.
In the past year, U.S. hog finishers and packers could offer more money for hogs than Canadian finishers and packers, largely because of smaller Canadian slaughter margins related to an appreciating loonie. Canadian pork became less competitive in foreign markets compared to lower priced U.S. pork.
At the same time, several Canadian packers declared bankruptcy, reducing total slaughter capacity. Fewer packers equals less competition equals lower prices offered to Canadian producers. That encouraged stateside sales.
The real spoiler was BSE, which increased beef consumption in Canada and reduced demand for pork. Canadian producers naturally sought other markets.
Unique domestic slaughter situations, a rising dollar and BSE combined to make 2003 an unusual year for the Canadian hog industry. And this anomalous year became the lightning rod that attracted American trade action.
Irrespective of this situation, American pork producers in their trade action accuse Canadians of ignoring market signals and increasing herd size even as markets seem to dictate herd reduction.
What they don’t grasp is the structural change afoot in Canadian agriculture.
There has been a general trend toward increased Canadian livestock production for years, particularly since the loss of the Crow Benefit that pushed farmers in a grain-based economy to add value by putting grain through stock.
Much of the expansion was generated on the premise that Asian demand would increase on pace, but Asian economic and animal disease factors intervened. And so the excess went south instead of east. After all, supplying part of the American market was also part of expansion plans. As well, an expansion focused on long-term restructuring was likely to ignore short-term market signals.
And there are other factors in play.
Canada, and the Prairies in general, have proven themselves an economical place to feed hogs. Yet in recent years the U.S., through its mammoth agricultural subsidies, has produced a wealth of cheap feed – so cheap that American feeders sought weaner exports from Canada by offering attractive prices. They got them, as Canadians supplied demand.
Hence some of the subsidies the Americans are complaining about are in fact their own. The irony is lost on them.
And what of U.S. pork producer complaints that “Canadian producers benefit from billions of dollars in numerous government subsidy programs”? Most Canadian pork producers would be hard-pressed to itemize government subsidies that they’ve received. Certainly they have benefitted from various provincial and federal programs over time but the idea that billions in subsidies have found homes in the pork industry is ample proof of the hyperbole that can accompany trade accusations.
With the North American hog industry in financial doldrums, American hog producers have little to lose and much to gain by petitioning trade action – especially during an election year, when politicians seek the all-important farm state votes.
But Canada and its producers have a strong defence and they must fight this action with every tool they’ve got. The last little pig in the nursery rhyme must have no application to them, or they’ll be counting losses instead of pigs.
