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Record High Hog Prices in the U.S. Prove Duties Against Hog Imports Unnecessary & Unjustified

by 5m Editor
10 December 2004, at 12:00am

Washington, DC — The Pork Trade Action Coalition (PTAC) today called on the National Pork Producers Council (NPPC) and other U.S. pork producers to end their antidumping case against live swine imports from Canada, citing record high U.S. hog prices announced by the U.S. Department of Agriculture (USDA) this week.

PTAC said these historic high prices are yet more evidence that Canadian live swine imports cannot be causing harm to U.S. hog producers, and urged the U.S. Commerce Department to eliminate the preliminary duties now being imposed on these imports.

U.S. hog prices reached a fifteen-year high in Iowa and Minnesota for the week ending December 3, according to this week’s issue of National Hog Farmer's North American Preview. According to the USDA, weekly hog prices nationwide in the U.S. are significantly higher than in 2003 and are double of what they were in 2002 (see attached chart).

In October, the Commerce Department announced preliminary duties on live swine from Canada ranging from 13.25 percent to 15.01 percent in response to a petition filed by the NPPC and other groups earlier this year claiming that Canadian hog producers were dumping (exporting hogs at a price below their cost of production).

"Record high prices, despite increased pig imports from Canada, demonstrate that the NPPC's claim that imports have somehow caused injury to the U.S. industry is unwarranted" said John R. Block, former U.S. Secretary of Agriculture and a Senior Advisor to PTAC. "Hog prices are higher than they have been since 1989, yet U.S. producers are telling the government that somehow these imports are hurting their profits — which for some companies are now at record levels. Theses claims are baseless; Canadian imports are not hurting the U.S. industry — they account for only 3.3% of the U.S. market. In fact, imports are actually strengthening the U.S. industry."

Canadian pigs are a vital component in U.S. pork industry productivity and profits — allowing U.S. packers (the companies that slaughter the hogs and turn them into pork products) and processors to remain competitive, and meet the combined demand for pork in the U.S. and in export markets that the U.S. has been able to develop. Because there is more capacity to slaughter and process hogs in the U.S. than the total supply of domestic born hogs, Canadian imports allow more hogs to be slaughtered therefore increasing the efficiency of packers' production lines. Canadian imports have also not affected U.S. live swine production, which has been increasing.

Block continued, "While U.S. producers are enjoying these high prices, thousands of American farmers who buy Canadian pigs and raise them to market in the U.S. are forced to pay the Commerce Department-imposed duty — a tax — which may force many family farmers out of business. Many of these farmers are members of the NPPC or state organizations that brought this case. Before filing this trade case, these groups should have considered the massive impact that this trade case would have on many of their own members. Now that it is clear the case is totally baseless, these groups should withdraw the petition before it does further harm ."

The Commerce Department will make its final determinations on margins early next year, and duties may increase or decrease from the preliminary determinations. The U.S. International Trade Commission (ITC) is expected to make a final determination on the question of whether imports have injured the U.S. industry in March 2005. The Commerce Department earlier rejected NPPC's claim regarding Canadian subsidies, ruling that Canadian support for hog and other farmers complied with U.S. laws and world trade rules.

U.S. and Canadian farmers, finishers and others formed PTAC to fight the antidumping trade petition. PTAC's goal is to ensure that the U.S. government considers all the facts in the Canadian Swine case fairly and objectively, with a full understanding of the ramifications of any decision.

Source: Pork Trade Action Coalition - 10th December 2004

Pork Trade Action Coalition

5m Editor