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Foreign Pork Producers Want Canada To Reform Industry (Jul 19, 2012)
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As Canada prepares to enter into the Trans-Pacific Partnership trade talks, some participating countries' pork producers are banding together to try to reform Canadian programs, which they say give pig farmers an "unfair advantage."

Meanwhile, a Canadian government official has justified government-funded programs for what he called a "struggling" industry in Canada, a sentiment echoed by an independent pork producer.

"Pork producers in Canada have disproportionately benefited from the government programs," said Nick Giordano, vice president and counsel for international affairs at the Washington-based National Pork Producers Council.

"Now that Canada is coming into the TPP, this is a perfect opportunity to be re-examining these issues," he said.

"We believe this sort of thing violates the spirit of both NAFTA and the Trans-Pacific Partnership."

The US industry might take expensive and time-consuming legal action, he said, if Canada doesn't consider reforming its government-funded programs, and if producer assistance does not become a topic of discussion at the TPP table.

"I'm not going to rule that out. I want to be perfectly clear; I am not going to rule out the United States industry filing more trade cases. We don't feel we should have to do this."

Andrew Spencer, CEO of Australian Pork Limited, also said Canada needs to reform its government influence in the agriculture sector.

Australia and New Zealand dropped government-funded agricultural assistance in the 1980s and 1990s, he wrote in an email to Embassy, but "Canada has not yet reformed its agricultural sector to the same extent."

Subsidized Canadian pork makes the export price cheaper, he wrote, which "displaces pork from other countries which do not operate subsidy programs, giving Canadian producers an unfair advantage."

Mr. Spencer said his organization has been meeting with Australia's Department of Foreign Affairs and Trade about the issue, and is engaged with Mr. Giordano's organization as well as New Zealand Pork to discuss further steps. "Australian pork cannot compete on a level playing field with Canadian producers while they benefit from such subsidies," he added.

Debate over support

A Canadian pork industry representative and a hog farmer both argued to Embassy the grass on their side of the playing field isn't actually greener.

The appreciation of the US dollar several years ago put a damper on the currency exchange advantage that Canadian pork producers enjoyed, and in 2007, the price of feed skyrocketed as soy and corn became targeted for ethanol production, according to the Canadian Federation of Agriculture.

Additionally, the 2009 H1N1 virus, also called Swine Flu, worsened global exports of pig product because of misguided fear that it carried the dangerous disease.

The CFA reports that the export of live pigs in June 2009 was 34.1 per cent lower then it was in June 2008. The estimated monetary loss for this decline was $402 million.

In August 2009, the Canadian government announced programs to help the struggling industry, and the Canadian Pork Council's public relations manager Gary Stordy said the programs put in place at that dire time are measures that are now, incorrectly, referred to as subsidies.

Most of the programs were used to shrink an industry that was too big to sustain itself, explained Mr. Stordy. "Our industry has had some difficulty over the past couple years," he said. "Producers, frankly, were in financial stress."

He said two programs that have caused a stir with foreign pork producers were essentially buyouts for farmers in trouble.

One of these, the Federal Cull Breeding Swine Program, went online April 2008.

The $50 million program was funded by Agriculture and Agri-Food Canada and carried out by the Canadian Pork Council. The program paid pork producers $225 per breeding swine removed from their farms, according to the council.

Farmers who were paid as part of the program committed to leaving their barns empty of all breeding pigs for three years. Mr. Stordy said that council regularly audited the participating producers by visiting the farms to make sure they were complying with the program requirements.

"Our industry did shrink, however our industry wasn't out of difficulty," Mr. Stordy said of the culling program.

The second federally-funded Canada-wide program was the Hog Transition Program, which sought to rid participating producers of their entire herd of pigs, not just breeding animals.

Again, farmers committed to a three-year term. As Mr. Stordy explained, the $75 million initiative worked like a reverse auction, and involved four rounds beginning in late 2009.

Pork producers could submit a bid of how much money they wanted to receive per animal that they got rid of, and those with the lowest bids were paid out, and shut down their hog production for a minimum of three years.

"Frankly, for those who took it, they would certainly say that it didn't replace any income or they didn't get the value of what they felt they should deserve," he added.

Even so, Mr. Giordano said these programs are still problematic.

"When the industry goes into a downturn, our producers don't have that sort of government protection," he said. "It's still producer support."

He said the US industry is "absolutely" concerned that when the three-year wait time expires in the fall of 2012, Canadian pork production might explode, with many farmers who are in comfortable financial standing re-opening their farms.

But Mr. Stordy said this is unlikely to happen.

The average age of pork farmers in Canada is 55 and over, and in an industry that is still struggling, it's not feasible for farmers that age to re-invest and start a business in the current conditions after equipment has been left to sit for several years, he explained.

'The cash crop really saved us'

Mr. Giordano also raised concerns with Canada's provincial programs, like Quebec's Farm Income Stabilization Insurance Program, which farmers with both crops and a variety of livestock can pay into.

"If that was available to producers in the United States, in 10 years pork production in the United States would double," he argued.

Despite criticism, programs such as these are not catapulting independent pork farmers such as Cindy Beaudry and her family into the spheres of success.

The young farmer, located in Saint-Valérien-de-Milton, QC., had 200 sows for many years, until cutting her herd in half last year.

Money was tight, she explained. The family did not participate in the federally-funded buyout programs, because it would mean completely cleaning their barns of pigs, and they did not want to give up entirely on an industry that their family has been involved in for more than 30 years.

But, she added, the price of the product has been falling, while the price of feed is increasing. Her family has been relying on crop production to keep themselves in business, she said, adding, "The cash crop really saved us."

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