Canada Pork Farmers Worry US Duties Will Further Harm Industry

by 5m Editor
8 March 2004, at 12:00am

CANADA - Canadian hog producers said on Friday they worry proposed duties on their exports to the United States could cause further harm to a badly battered sector that receives little government aid.

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The U.S. National Pork Producers Council said on Friday it filed anti-dumping and countervailing duty petitions with the U.S. government against live Canadian weanling and market hogs.

The farmers want duties ranging from 5 percent to 20 percent on imports, starting as early as June 1, because they believe a Canadian risk management program and a provincial program in Quebec are unfair subsidies.

"My gut reaction is, 'Oh no,'" said Gerry Friesen, a hog farmer from Wawanesa, Manitoba and chairman of a producer-owned marketing group.

"If and when a (duty) would be imposed, it would be devastating for our industry here, going hand-in-hand with what we've been through in the last number of years," Friesen said.

U.S. farmers complain their prices dropped because Canadian exports surged to 7.3 million hogs in 2003, up more than 35 percent from 2001. Total U.S. slaughter in 2003 was just under 100 million hogs.

Two-thirds of the exports were weanlings -- piglets shipped to U.S. feeder barns in the U.S. Midwest where abundant corn makes it cheaper to grow the hogs to market weight.

More farmers have switched to produce weanlings for the U.S. market because demand is strong and it cuts their losses, which in 2003 rose as high as C$30 ($23) per market hog.

The U.S. industry relies on Canadian hogs to keep it efficient and profitable, which benefits U.S. hog farmers, said Edouard Asnong, president of the Canadian Pork Council.

"The more they kill, they more efficient they are and the more they can export to other markets," he said, explaining poor North American prices are based on world factors and not caused by Canadian exports.

Asnong said Canadian aid programs were designed in close consultation with trade lawyers to make sure they could not cause a trade war with the United States.

"It's not a generous program at all," Asnong said, describing a federal income insurance program at issue in the U.S. complaint.

"I'm comfortable that we're going to prove we're not trading with the U.S. unfairly," Asnong said.

The Canadian government rejected claims on Friday that it unfairly subsidizes exports and said it would defend itself against duties, if imposed.

The timing of the trade challenge could not be worse, industry sources told Reuters.

"I would suggest that our industry is teetering on a very fine line," said Perry Mohr, chief executive officer of Manitoba Pork Marketing, a farmer-owned hog marketer.

Farmers have been hit by low prices followed by record-high feed prices because of drought and then a surge in the Canadian dollar that made their exports worth less in the U.S. market, Mohr explained.

Wheat farmers have been hurt by steep duties that have kept their grain out of the lucrative U.S. milling market for the past year.

Beef farmers, dependent on the U.S. market, have struggled since a case of mad cow disease turned up in Alberta last May, cutting off their exports.

Pork consumption in Canada slowed as Canadians sympathetic to beef farmers' plights -- and lured by cheap prices -- stocked up on beef instead of pork.

If U.S. farmers are successful in their petition for a duty, that could accelerate consolidation in the industry, Mohr said.

"The only thing that could probably be worse for us would be a complete border closure," he said.

Source: eFeedLink - 8th March 2004

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