The report says a catastrophe is shaping up and could lead to a decline in Canada's pork exports, at a time when Canadian hog production is striving to keep up with global markets.

The report also talks about how Canada has failed to recognise the close relationship between livestock and feed grains whilst deciding on policies concerning both sectors.

At present, more ethanol is derived from corn and grains (although the US is coming up with ways to implement its plans to produce cellulosic ethanol). The Canadian capital and other provinces in the country have been working to drive up the use of ethanol in conventional fuels and also boost biodiesel consumption. In 2008, a new regulation was introduced wherein conventional diesel was to contain at least 2 per cent of biodiesel.

According to Canadian news agency, Business Edge, Jacques Pomerleau, executive director of Ottawa-based Canada Pork International, notes the exchange rate and access to international markets will present the two biggest challenges to Canadian pork exports in 2009.

Canadian pork producers are put in a position of disadvantage because US pork rates determine Canada's prices. The US's plans to boost ethanol production through loans, tax cuts and government subsidies does not help with the matter. This impacts both hog and grain sectors immensely.

Currently, both segments are wallowing in the benefits of the low US dollar. But the gains are only short-term and they must both cooperate for the industries to be sustainable.