Canadian pork industry seeks help from the government
The Canadian Pork Council (CPC) urges the government to release funds in order to get some relief for the industry, which is going through hard times caused by the COVID-19 crisis. In a submission sent to the House of Commons Standing Committee on Finance, the Council asked that the government protect the viability of Canada’s pork industry by offering emergency liquidity support for pork producers that are under extreme financial pressure because of COVID-19. Also, CPC wants the government to invest in a 3 year $50 million African swine fever (ASF) pandemic prevention plan to protect the pork value chain against the immediate threat of a disease which would have a devastating impact on Canadian farm families, food security, biodiversity and the economy.
"Farmers across agriculture face significant pressure as they produce food. However, several important factors make pork producers more exposed to risk and volatility. Pork producers operate in an export-dependent sector. Producers export live pigs, including piglets and market hogs, mainly to the US. The pork value chain exports a variety of pork products, from fresh and frozen pork to processed products, to more than 90 countries around the world and contributes 25 billion to the economy. As a result, most Canadian pigs are sold on US-based prices. US-based pricing means that even if Canadian market fundamentals are positive when prices fall in the US they fall in Canada too. In a healthy trade environment, this can be beneficial for Canadian farmers. However, recent events have brought increased unpredictability to global markets, leading to significant losses for Canadian pork producers," reveals the Council.
COVID-19 has forced producers into some of the steepest, most profound declines the market has ever recorded. Forecasts made in June 2020 project that pork producers will lose $20/hog for every hog they sell in 2020. Across the country, this means that producers will lose more than $500 million. Those forecasts predict that producers will only make money on the hogs they sold in May and will lose money during the remaining 11 months.
For the last two years, Canadian hog producers have been sailing through turbulent times and most of the problems appeared due to the interconnection with the US market. Examples of events negatively impacting Canadian pork producers include the following:
- In 2018, the China-US trade war led to a 37% drop in prices from August to September. Because the prices Canadian Pork producers get for their pigs are based on the US pricing system, Canadian producers lost more than $40/ pig.
- In June 2019, China suspended Canadian pork imports for reasons outside of pork producers’ control. Canadian pork exports to China dropped from an average of $84 million per month in May to less than $1 million in July.
- The rapid expansion of US hog production in the last 24 months has driven down Canadian and American live hog prices.
- In May 2019, the United States Department of Agriculture announced the $16 billion Market Facilitation Program. The program offered American producers a per head payment of $8 in 2018 and $11 in 2019 ($10.30 and $14.50 in Canadian dollars).
- In April 2020, the USDA announced its first round of COVID-19 support to producers. With a total envelope of US$16 billion, it will pay pork producers up to $45/hog ($60CDN).
Also, the document reveals the urgent need for the establishment of the Canadian Pork Promotion and Research Agency to support the long-term growth and competitiveness of Canadian pork producers.