US demand for Canadian pork stable, hog imports to fall

Credit-line issues and country-of-origin labelling regulations will keep Canadian exports of fresh, chilled and frozen pork products to the US stable in 2009, but the number of feeder pigs sent across the border will drop sharply, the head of an industry group said.

 

Martin Rice, executive director of the Canadian Pork Council, said Tyson Foods, the lone US packer still willing to import Canadian feeder pigs, will only take them if a huge price discount is applied. The price discount was linked to the labelling requirements.

 

"We are also hearing of major reductions in purchases of Canadian feeder pigs because importers cannot get assurance of credit from lenders," Rice said. "US money lenders are looking at anyone buying Canadian feeder pigs as a high-risk venture, as they are unsure as to whom these individuals will be able to sell the pigs to."

 

US imports of Canadian feeder pigs from Jan. 1 to near the end of March totalled 1.13 million head, Rice said. During the period a year earlier, the US had imported 1.68 million feeder pigs.

 

Rice said the US in 2008 imported a total of 6.8 million feeder pigs.

 

"Based on the purchase pace seen so far, sales of Canadian feeder pigs to the US in 2009 could easily be down 40 percent from 2008," Rice predicted.

 

He also said that without Canadian feeder pigs, US processors will be looking at the possibility of having substantially fewer pigs, which has implications for the US hog industry.

 

"With the shortage of pigs to work with, the US processors are going to have to make a choice: Either cut back in supplying their offshore export programme or forget about being able to service the domestic sector," Rice said.

 

"When the shortages occur, the US market will then have to find other sources of supply," Rice said. "When this occurs, more Canadian pork could be imported into the US."

 

Rice said the labelling law became enforceable in late March, and there were still quite a few Canadian pigs in the US pipeline. The US supply of hogs is also currently robust. Because of that, the supply shortage wasn't likely to appear until possibly sometime between May and July.

 

"With the shortage of pigs for processors will come higher pork prices for US consumers," Rice said, noting that only the big companies have benefited from the country-of-origin labelling, or COOL, rule.

 

US imports of fresh, chilled and frozen pork from Canada in 2008 totalled 307,000 tonnes, down from 2007's level of 354,000.

 

"In 2009, US imports of Canadian pork products will be about the same or possibly higher, depending on when the shortages occur," Rice predicted.