US Swine Economics Report

by 5m Editor
14 October 2004, at 12:00am

Regular report by Ron Plain on the US Swine industry, this week discussing the Canadian Anti-dumping duty.

Ron Plain
Ron Plain

On October 15, the U.S. Department of Commerce is expected to issue its preliminary ruling on whether Canada is guilty of dumping hogs on the U.S. market. Under WTO rules, a country is generally considered to be "dumping" if it sells a product in a foreign market at a price that is below the cost of production. Given that hog prices dropped into the $20s in the fourth quarter of 2002, there is little doubt that some of the hogs which Canada sent south in the last few years were sold at a loss. We'll find out Friday if the Commerce Department decides this is a serious enough problem to levee a duty on Canadian hogs.

Canada has long been an exporter of hogs to the U.S. Hogs imports have become a controversial issue in recent years because the numbers have become so large. Last year, Canada shipped 7.4 million hogs and pigs to the U.S. This year the number could well exceed 8.5 million. Roughly two-thirds of these imports are feeder pigs and one third is slaughter hogs.

Canada is the fifth largest pork producers in the world and is one of the two fastest growing countries, thanks to the U.S. From 1998 to 2003, Canada increased its pork production by 41.7% and its hog exports by 80%. Virtually all of Canada's hog exports and 45% of their pork exports go to the U.S.

So much pork and so many hog are coming south that there is now more pork from Canadian-born hogs consumed in the U.S. than is consumed in Canada.

In 2003, Canada exported a quarter of its pig crop to the U.S. and slaughtered the remaining 75%. Of the hogs slaughtered in Canada, 51.4% of the pork was exported and 48.6% was consumed in Canada. Of the pork exported, 45% was shipped to the U.S. and 55% went elsewhere. Of the hogs and pork shipped to the U.S. slightly less than 1% was re-exported back to Canada.

If the U.S. does put a tariff on Canadian hogs, it should lead to an increase in Canadian hog slaughter, and to an increase in pork imports from Canada and a reduction in pork exports to Canada. If a tariff is charged on a per head basis, it will be especially negative to feeder pig exports. If it is levied on a per pound basis it will be more negative to exports of slaughter hogs.

5m Editor