Farm-Scape, Episode 2072

Consistent high quality is getting the credit for propelling Canadian pork exports to new records in terms of both volume and value during 2005.

“Canadian pork has an exceptionally good reputation in the market and that's based on a number of key characteristics,“ states Fiona Boal, the vice-president of food and agribusiness research with Rabobank International.

“Obviously Canada has very stringent animal health, animal welfare and environmental regulations which consumers, in particularly the high end developed markets, are starting to take a lot of interest in. We also know that Canadian pork exporters are very good at producing the exact products that consumers want.“

Volume Up by 10 Percent, Value Up by Five Percent

In 2005 exports of Canadian pork soared to 1.029 million tonnes, valued at $2.84 billion Canadian. That represents an increase of about 10 percent in terms of quantity and an increase of about five percent in terms of value over 2004.

Canada Pork International executive director Jacques Pomerleau says, “The United States remained the number one customer for Canadian pork but there was a decrease of about 10 percent compared to the previous year. Japan jumped by over 30 percent, to 265 thousand tonnes over 2004 and that was in both value and volume.“

Pomerleau continues, “Australia remained our third largest market in value with $125 million followed by Korea, where our exports more than doubled over one year. Korea now accounts for 60 thousand tonnes and $100 million and it’s now, in terms of value, ahead of Mexico which is quite a surprise. Then after that we find China-Hong Kong which accounts for 53 thousand tonnes and sales of over $65 million.

Specific Markets Seek Specific Products

“Each market is kind of unique,“ says Gord Montgomery, the president of Canada Pork International. He states, “The fact is that we, as Canadian exporters, need to export all of the animal so therefore we need to focus on all the markets. Some markets take the high valued primals, other markets take the kill and cut credits but we need to be into all of the markets.“

Montgomery says, “Japan is looking at the higher value chilled pork but they also take frozen material for processing, they buy also kill and cut credits. China is mostly looking at kill and cut credits with minimal primals.“

Montgomery observes, “The advantage we have is we have high health status, a positive safety record, good quality product and we have historically and still continue to be very export focused.“

He notes, “A lot of those activities are promoted through CPI, through the various functions we have in the markets to make Consumers and customers aware of Canada as a supplier.“

High Health Status Worth Protecting

“Canada is perceived as a country of big open spaces, pristine environment and we need to capitalize on that,“ recommends Clare Schlegel, the president of the Canadian Pork Council.

“We have high health status. We have to do everything we can to protect that health status because we have access to markets that other competitors do not, because of that.“

“Canada has had an excellent year,“ he observes. “It shows that we’re putting out a desirable product from a consistency, taste perspective. It’s desired around the world and, frankly, we’ve done a good job of marketing in the face of very tough competition, in the face of a weak U.S. dollar, so I think our industry should be congratulated on their achievements.“

As Boal notes, “Canada has recorded its 14th consecutive year of record exports. To put that in perspective only the U.S. has a slightly better record than that. They’ve achieved 15 consecutive years of record pork exports.“

Competition Remains Strong

Boal observes, “It’s seems likely that exports will stay around current levels.“ But she notes, “We have to be very conscious of the competition. We expect U.S. production to be up anywhere between two and three percent and obviously the majority of that extra production will be sent to their key export markets. The big one to watch, both now and longer term, is our South American neighbours. Brazil, their production is expected to continue skyrocketing.“

Schlegel agrees, “Our competition is getting stronger and there’s some economic market forces that are moving against us so we need to be focused for our industry to succeed. Certainly the United States, Brazil, Chile, the EU are all very very strong competitors and each for a particular different reason.“

“To succeed it’s really important that we increase our activity in non-NAFTA markets, not in the United States and not in Mexico because the competition there is severe, particularly in Mexico from the United States.“

Non-NAFTA Key to Decreased US Dependence

CPC executive director Martin Rice notes, given the pressure Canadian exporters have faced, the fact that exports have exceeded one million tonnes is outstanding.

He explains, “The weaker U.S. dollar has left Canadian pork having a much more challenging task in selling to export markets and still sustaining the industry in terms profitability. We have seen our exports to other countries than the U.S. grow much faster even than the total exports because, as the United States has become itself more and more of a major pork exporter, we’re seeing less of our product going there. For us to increase our pork exports in total, we’ve had to redouble our efforts to export to non-NAFTA markets.“

Schlegel points out, “The United States surpassed us now as the world's number two pork exporter behind the EU in 2005.“

He suggests, “It’s ironic, in a way, that essentially the amount of pigs they’re buying from Canada, once they’re grown and processed, equals the amount of the U.S. exports. The weaker U.S. currency has allowed them some economic advantages, particularly in Asia and Mexico that we haven’t been able to enjoy. They’ve got some advantages that are difficult for us right now to compete with.“

However, he concedes, “Saying that, as more pork moves out of the whole integrated North American market it creates the better price stability that we need here. We know that pig prices are moving into the lower half of the price cycle so it’s critical as, we face both increased competition from both beef and chicken, that the protein sector in North America sees as much demand as possible.“

WTO Negotiations Viewed as Key

Schlegel insists, “We need a successful WTO round. Market access is absolutely critical and the lowering of tariffs into some of these countries. We know that some of our competitors are working very diligently on free trade agreements, bilaterals between two countries. The example there would be both the United States and Chile and they would get preferential access over Canadian product. That would be a problem for us.“

“Thirdly,“ he says, “from the Canadian government we need continued support, from the embassies abroad, trade promotion programs. We need to increase the desirability and presence of the Canadian image, particularly in markets around the world where we're selling through to retail.“

Schlegel notes, “There’s some exciting possibilities there, particularly in Korea, and maybe even in Mexico where we can increase our sales opportunity by increasing the Canadian brand and the Canadian presence.“

Politics Always a Factor in Trade

Montgomery echoes the sentiment, “[With] competing supply countries like Chile and Mexico signing trade agreements with some of our export markets, our government needs to be out there signing export agreements also because we're going to be put at a disadvantage.“

“Politics always do get involved at the end of the day and, when exporters get an advantage over us, as an exporter, it makes it very difficult for us to compete.“

Staff Farmscape