November 23, 2009

Canadian hog market recovery still months away

It will take eight to 10 months for Canadian pork prices to return to pre-AH1N1 outbreak levels, predicts Ken McEwan, professor of production economics, University of Guelph.

But China's lifting of an import ban on US pork and disease outbreaks in the country's swine herd could be a positive for Canadian hog prices and exports.

McEwan said China's decision to lift a ban on pork from the US and some Canadian provinces last month is good news, because the Canadian share of US exports is roughly 8-9 percent. US pork industry statistics from 2008 show the US exported four million tonnes worth US$690 million to China.

At the same time, trade data, in particular that from the US and China, shows that AH1N1 is taking its toll on the industry, he said.

Despite the health organisation's assurances that pork was safe, China banned live swine, pork and pork product imports from the US and from Alberta, Manitoba and Quebec following the outbreak of AH1N1 flu earlier this year.

McEwan said US pork exports to mainland China and Hong Kong from January to September of this year had dropped by 66.3 percent, based on carcass weight, compared to the same period last year.

In 2008, China was the US pork industry's number three export market and its fastest growing market. He said US industry estimates put AH1N1 related losses at more than US$63.5 million. He estimates the Ontario industry's loss to be between CA$6.3 and CA$7.4 million.

It is not clear if recent disease outbreaks in China and the country's decision to lift its import ban are related, he adds. He explains the Chinese government has been providing subsidies for increased production and the resulting boost in numbers may compensate for the loss in production related to the diseases.

Media reports in October indicated that China was coping with an outbreak of hog cholera, a highly contagious disease. However, the country's agriculture ministry has stated that the country's overall swine disease situation remains stable.