Paragon Economics says the price differential in the U.S. between Canadian and American sourced pigs is shrinking as the swine industry adjusts to U.S. Mandatory Country of Origin labelling.
The September 30, 2008 introduction of U.S. Mandatory Country of Origin Labelling immediately reduced U.S. demand for Canadian origin pigs.
U.S. purchases of Canadian market hogs were 60 percent plus lower in 2009 than one year earlier while feeder pig purchases fell by about 25 percent.
Paragon Economics president Dr. Steve Meyer says the drop was partly due to COOL and partly due to reduced Canadian production.
Dr. Steve Meyer-Paragon Economics:
Packers and feeders in the U.S. have adjusted.
At first of course there were packers that said we're only going to buy U.S. pigs, we're not going to buy any Canadian sourced pigs.
It didn't take long for packers to figure out that they could use some Canadian sourced pigs and put that product into non-labelled usage or those kinds of things.
So there's an adjustment process going on.
My understanding is there aren't significant discounts on price between U.S. and Canadian animals now, not like there was in the beginning days and so I think we're going to see that continue.
As far as what's going to happen in the future on Country of Origin Labelling, we need to remember it is the law in the United States and so unless something is done to change that law it stays in effect.
Obviously Canada and Mexico have challenged it in a WTO filing and that's going to run its course and that could possibly lead those countries being able to put duties on U.S. products coming into their countries but they're not going to change U.S. law.
Only the U.S. Congress can change that so for the foreseeable future we're going to have Country of Origin Labelling.
Dr. Meyer says the adjustments are being made and U.S. processors are doing a good job of sorting Canadian origin pigs and most of the Canadian origin product is going into food service, processed products and even exports where they don't have to carry a label
-Bruce Cochrane.