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COOL Legislation Brings About Uncertainty

by 5m Editor
30 October 2008, at 12:38pm

CANADA - It's likely that American food labelling rules could cost Manitoba 50 per cent of its weanling pig exports to the US - a business once valued at $150 million annually, according to the Manitoba Pork Council.

Andrew Dickson, the group's general manager, said yesterday that American buyers have severely cut back purchases in the wake of US country of origin labelling (COOL) legislation, which took effect September 30th.

"The way it's going we're going to be lucky if we can hold on to half the weanling market," he said.

The new labelling rules require that US retailers indicate the country of origin for pork and a host of other foods.

Some major American packers, including Hormel Foods and John Morrell Co., have indicated they will no longer accept Canadian-origin hogs because of the new rules. Canadian lobbyists were unsuccessful in persuading US officials to regard pork from Canadian-born pigs fed in the United States as a US product, reports the Winnipeg Free Press.

Before the law took effect, Manitoba producers shipped about 4.2 million weanlings a year to the US feeders.

"It's just uncertain right now what is going to happen," Dickson said in an interview.

That uncertainty is leading to a stepped-up liquidation of Manitoba's pig breeding herd, which totalled 347,000 animals on Oct. 1.

"We probably have about 150,000 to 170,000 sows dedicated to supplying weanlings into the United States. If we held on to half of those sows to produce weanlings, there's still a large number that are going to be liquidated," Dickson said.

Earlier this year, Manitoba hog producers culled 22,000 head of breeding stock as part of a $50-million federal initiative to slash the Canadian pig herd due to overproduction. Farmers received $225 per sow in exchange for idling barns.

While COOL has slowed the number of weanling pigs heading south of the border, it's all but stopped the export of market-weight hogs, industry officials say. Manitoba once shipped 1.2 million of these pigs annually.

Many of those pigs are now being slaughtered in Manitoba, as Maple Leaf Foods has added a second production shift at its new Brandon slaughtering plant. The facility can now process up to 86,000 pigs a week.

Yet, with the U.S. border largely closed to market hogs because of pork labelling rules, farmers are concerned about a lack of competition for their animals.

Canadian hog producers have suffered severe losses in the last year due to overproduction, high feed costs, U.S. non-tariff trade barriers and a high-valued loonie.

Weanling producers have been forced to sell their pigs for a fraction of the cost of producing them. Farmers who feed pigs to market weight were losing as much as $50 per animal last fall.

While weanling producers are still facing staggering losses, the situation has improved considerably for those selling market hogs.

John Preun, chairman of the Manitoba Pork Marketing Co-op, said falling feed grain prices, strong offshore demand and a devalued loonie have brought returns on market hogs to near break-even levels for the most efficient producers.

Preun said he was hopeful that prices for these hogs could return to profitability by mid-2009. "At this point, there's a light at the end of the tunnel; we just hope it's not another train coming at us," he quipped.

5m Editor