Hogs: Removing The Canadian Corn Countervail

KANSAS - Recently released figures document that Canada is producing fewer pigs this year than last, with the first quarter pig crop for 2006 down 2% (about 150,000 pigs) while the pig crop from the last quarter of 2005 was down nearly a half a million pigs. Yet, we have imported 250,000 more feeder pigs from Canada so far in 2006 than we did during the same period in 2005. Clearly, if Canada is producing fewer feeder pigs but sending more feeder pigs to the United States, conditions can’t be financially conducive to feeding pigs in Canada.
calendar icon 29 April 2006
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A key reason is that on December 15, 2005, US corn entering Canada was assessed a $1.65/bushel tax by the Canadian government due to a trade dispute with the U.S. Suddenly feeding pigs in Canada became an expensive proposition, particularly for feeders in eastern Canada (Ontario and Quebec) who relied heavily upon corn in rations (western Canadians have always used locally plentiful barley and were somewhat insulated).

Feeder pig trade and production patterns changed starkly after the imposition of the duty. During the first 3 months of 2006 – right after the corn tax was imposed – nearly half of the feeder pigs arriving from Canada came from corn-dependent Ontario. For the comparable period in 2005, only 25% of imported feeder pigs came from Ontario. This represented about 7,500 additional feeder pigs per week (about 6 barns full) from Ontario. Indeed, April inventory figures from Canada show the Ontario and Quebec market hog herds are 3% lower than April 2005, while western market herds (Alberta, Saskatchewan, and Manitoba) are only 1% lower than last year.

On April 19, the Canadian trade authority that had imposed the duty found that, after some investigation, the tax was not justified. The Canadians stopped paying the additional tax on US corn and the trade authority said it would return the previously collected taxes.

Source: CattleNetwork.com
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