Record-high pork values to cushion Russia’s sanctions

(Photo courtesy ARS/USDA)

Russia’s retaliatory sanctions on Canadian agrifood, while disappointing from where Manitoba’s pork producers sit, aren’t expected to hurt the sector in the near term.

Following a declaration from President Vladimir Putin on Wednesday, Russian Prime Minister Dmitry Medvedev on Thursday confirmed the government has “completely banned the importation” of beef, pork, fruit and vegetables, poultry, fish, cheese, milk and dairy goods from Canada, the U.S., the European Union, Norway and Australia.

The import bans, effective Thursday, are to last one year, Medvedev said in a statement. Putin said Wednesday the bans are meant to hit back at “countries that have decided to impose economic sanctions on Russian legal entities and/or physical individuals.”

Canada, for one, has imposed sanctions on certain Russian entities and individuals since mid-March and added further sanctions as recently as last week, citing “the Putin regime’s continued illegal occupation of Ukraine’s Crimean peninsula and its provocative military activity in eastern Ukraine.”

Pork has been one of Canada’s top exports to Russia, according to Manitoba Pork Council chairman Karl Kynoch of Baldur, about 100 km southeast of Brandon.

But it now looks like Manitoba’s hog producers have been “caught up in politics again,” this time internationally, he said.

Russia had bought C$492 million in Canadian pork in 2012, he said, but that figure slipped to $260 million in 2013, partly as Russia began enforcing import bans of meat from animals treated with the growth-enhancing drug ractopamine (marketed to hog producers as Paylean). By early last week those bans had blocked pork exports to Russia from all but a handful of federally-inspected Canadian plants.

Until last week, HyLife Foods at Neepawa was the only Manitoba site still approved to ship to Russia, under what veterinary and phytosanitary agency Rosselkhoznadzor calls “enhanced control” pending the results of lab tests on samples.

Representatives from HyLife and from Maple Leaf Foods — whose Brandon, Man. pork plant had been on Rosselkhoznadzor’s restricted list, but whose Lethbridge, Alta. plant was still cleared until Thursday to ship to Russia — were not immediately available for comment.

Even with the Paylean-related bans in play, however, Canada had been on track to ship $500 million in pork to Russia this year, having sold $213 million in pork from Jan. 1 to May 31, Kynoch said.

For Manitoba — which ships a relatively high 85 per cent of its total pork output to other provinces and countries — the loss of a major export market at any other time could have clogged the supply line and depressed pork and hog prices, he said.

Today, though, pork prices remain at record-high levels, due to lower production in Manitoba and other jurisdictions, on top of expected major reductions in the U.S. hog herd due to porcine epidemic diarrhea (PED).

“At the end of the day we’re in a strong demand period,” Kynoch said, and Canada’s pork producers won’t feel any damage from Russia’s new sanctions if processors are able to quickly redirect the meat elsewhere.

“Canada’s packing industry has a very good relationship with over 80 countries, and we are confident that our packers will be able to reroute these pork products to other countries sooner rather than later,” the Manitoba council said in a newsletter Friday.

“Product shortfalls”

“I think the hurt is going to be felt more in Russia, by its own people,” Kynoch added. “It will be interesting to follow this and see what happens.”

Medvedev on Thursday said Russian government ministries were instructed to “chart a joint action plan in order to compensate for product shortfalls and, of course, to prevent price hikes.”

According to Reuters — quoting the International Trade Centre, a United Nations/WTO joint venture — Russia in 2013 bought about US$17.2 billion in foods from the sanctioned countries, of which about $9.2 billion came from categories affected by last week’s new sanctions.

Of that $9.2 billion, about $1.6 billion was in fresh, chilled and/or frozen pork, followed by cheeses ($1.3 billion) and fresh whole fish ($909 million).

Canadian foods sent to Russia in 2013, in categories subject to Thursday’s sanctions, were valued at US$373 million, down about 47 per cent from 2012.

The import bans, Medvedev noted, will not apply on the products individual Russians buy if travelling in the sanctioned countries, where Russian customs rules permit. The bans also do not apply to imports of baby foods, he said. — Manitoba Co-operator/ Network

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