July 22, 2009

Canada's government emergency subsidy programme for its pork industry may have "lethal impact" on US pork producers.

 

The proposal, implemented by the Canadian Pork Council, would pump US$800 million to Canadian pork industry which would definitely hurt the US swine sector according to the country's National Pork Producers Council (NPPC).

 

The key component of the programme is a loan to pork producers - to be repaid over 10-15 years - of C$30 for each market hog. A second component would provide C$500 for each sow culled plus the market value of the animal.

 

The proposal would artificially prop up Canadian pork production, according to NPPC.

 

According to Iowa State University economist Dermot Hayes, US live hog prices would be approximately 7 percent lower than otherwise would have been the case.

 

NPPC president Don Butler said such subsidy programme would be "lethal to pork producers as it will shift financial pain to US producers who already have lost an average of more than US$21 per hog since October 2007."

 

Butler pointed out that while the programme is described as a 'loan', it is unlikely that commercial banks would make unsecured, subordinate loans to Canadian pork producers at a time when they are losing money.  He said the programme is "really a cash bailout" and that NPPC is keeping all options open to address this issue.