April 15, 2004

 

 

US To Investigate Canada Hog Dumping Allegations

 

The U.S. Commerce Department is due to announce this week whether it will formally investigate U.S. complaints that Canadian weanling pigs and butcher hogs are being dumped into the U.S. market, and Canadian officials hope that the U.S. government sees the imports from Canada simply as a result of exceptional circumstances.

 

Canadian officials say that higher volumes of live Canadian hogs imported by the U.S. in 2003 were due to a number of factors, including the strong Canadian dollar and bovine spongiform encephalopathy, or mad-cow disease.

 

Canada exported 7.4 million feeder and slaughter pigs to the U.S. in 2003, up 30% from the 2002 level, according to U.S. Department of Agriculture data. As a result of the increase, U.S. hog producers have filed anti-dumping and countervailing duty petitions with the U.S. government.

 

An increase in Canadian hog exports to the U.S. that in the later half of 2003 was due to, among other things, the sudden strength of the Canadian dollar, which put pressure on Canadian packing-plant margins, as export revenue declined but costs remained he same, said Martin Rice, director of the Canadian Pork Council.

 

In addition, Rice said, BSE in the cattle sector increased domestic interest in beef as consumers rallied around the struggling industry - putting pressure on sales of pork in Canada.

 

As a result, two domestic plants shut down temporarily, said Rice. At the time, the U.S. markets paid better prices than what was available from the remaining Canadian packers, and Canadian hogs moved south.

 

"We provided to the U.S. authorities evidence that the packing capacity that was temporarily out is coming back and we're seeing new additional capacity being brought on," said Rice. He added that the conditions are now in place for the increased slaughter of hogs in Canada.

 

Edouard Asnong, president of the Canadian Pork Council, said he did not understand the rationale behind the U.S. investigation and said "all that we have done is in compliance with their own rules ... we have followed the market signals."

 

"The situation is corrected now, because the Canadian packers who reduced their kills have now reached the same level as before, and maybe higher," said Asnong.

 

On the weanling side, structural changes in the U.S. industry have resulted in favorable conditions for feeding pigs in the U.S., especially Iowa, said Rice. He added that conditions in Canada were well suited to meet that demand.

 

U.S. producers have an appetite for Canadian weanlings, said Asnong. "We are just responding to the demand ... and now that we are adjusting to that, we are blamed," he said.

 

The U.S. is also becoming a major pork exporter, sources point out.

 

"Therefore, Canadian hogs shipped to the U.S. don't necessarily depress the U.S. market. In fact they are hogs that U.S. packers could use to increase their exports to Japan and elsewhere," said Rice. He added that "the more these companies export, the more strength there is to the hog market."

 

As for claims that the Canadian hog industry is subsidized, Asnong said that all Canadian programs fall under World Trade Organization (WTO) guidelines and are not unfriendly to trade.