November 1, 2004

US Group Expects Duties To Limit Canada Swine Breeding

US import duties on Canadian hogs - preliminarily approved this month by the US Commerce Department - should restrictl what's seen as a constant expansion of Canada's swine breeding capacity, according to the US-based National Pork Producers Council.
 
Canada's subsidization of its hog farmers has been providing incentives for farmers there to add breeding sows for years, but new duties are a likely bet to halt that trend, NPPC officials said.
 
According to Dermot Hayes, an Iowa State University economist speaking for NPPC this week, said, "What's true is the Canadian sow producers have had income guarantees. The US producers have not. And the Canadian producers have, quarter over quarter, consistently increased the size of their (breeding) herd and the US producers have not. In fact the US (breeding herd) has fallen."
 
The US Commerce Department rejected in August a request by US pork producers to levy countervailing duties on Canadian hogs, but later affirmed that Canada was dumping hogs into the US market at prices "less than fair value" and set preliminary anti-dumping duty rates.
 
Hayes and NPPC member and former president Jon Caspers said the build-up of sows in Canada has resulted in a steady increase of commercial hogs and feeder pigs being sent to the US, but new anti-dumping duties would substantially increase the cost of shipping those Canadian exports across the border.
 
As a consequence, the market value here of swine from Canadian will decline, likely giving US producers a bump in prices they receive, Hayes said.
 
"Most of the adjustment will be a downside price movement in Canada," he said. "The duty amounts to a $7-$8 per feeder animal so you should see about a $6 decrease in the Canadian price and a $1-$2 increase in the US price."
 
The preliminary duty affirmation issued by the Commerce Department, was set for three specific Canadian companies: Ontario Pork at 13.25%, Premium Pork at 15.01% and Hytek at a "de minimis" level, which means no duties will be charged. Another level for "all others" was set at 14.06%.
 
The Commerce Department is scheduled to make its final determination on the case, brought to the US government agency by pork producers, March 7, 2005. If that final determination affirms Canadian exporters are dumping live swine on the US market, the independent International Trade Commission will issue its own final determination on "whether imports of live swine are materially injuring, or threaten material injury to, the US swine industry."