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Lower Dollar to Bring Only Limited Benefits for Pork Exports

29 January 2015, at 11:04am

CANADA - The director of international trade, government and media relations with the Canadian Meat Council, says the lower value of the Canadian dollar will have a limited beneficial impact on Canadian competitiveness in the international market, writes Bruce Cochrane.

The value of the Canadian dollar has fallen to just over 80 cents US from its high of over 92 cents in August of last year.

Ron Davidson, the director of international trade, government and media relations with the Canadian Meat Council, says the value of the Canadian dollar versus other currencies is ever changing and is difficult to predict, and since we export pork and live pigs to the United States without tariffs Canadian processors are competing directly with American processors.

Ron Davidson-Canadian Meat Council:

During 2014 we probably exported between 4.7 and 5 million hogs to the United States so our prices are established by the US prices and if the Canadian dollar falls it just means in dollar terms we will be paying more to compete with the US price.

Since the live hog accounts for, depending on the year, 77 to 80 per cent of the cost of our processing plants it doesn't have as much of an impact as you might think.

If we look at the other 20 to 23 per cent which account for labor and other costs associated with running a plant we could have some short term advantage there.

Although many of the products, for example the antimicrobials that we use and some of the equipment, is coming in from the US.

Looking at the international market, the other thing we need to take into account is the European prices dropped dramatically when Russia imposed the embargo on European pork and Canadian and US.

So because of the weak market in Europe their prices have been lower on the export market.

Mr Davidson says the lower dollar will help us but it won't have the impact you might think when simply looking at the Canadian dollar versus the US dollar.

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