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COOL choking off Manitoba hog exports

Manitoba’s hog exports are plummeting and pork producers are scrambling for slaughter space as fallout from the new U. S. country-of-origin labelling (COOL) rule mounts.

Slaughter hog shipments to the U. S. are down 75 per cent over the past three months because many American packers are refusing Canadian pigs until confusion over COOL subsides.

Meanwhile, Manitoba producers are desperately trying to find other plants to accept their finished pigs.

Unfortunately, there’s not enough slaughter space at home to accommodate the hogs that would normally go south.

“Finding a home for all the hogs in Western Canada is becoming an issue,” said Perry Mohr, Manitoba Pork Marketing Co-op general manager, in what was probably the understatement of the week.

The U. S. Department of Agriculture reported imports

“The slaughter market south has pretty much come to a halt.”

– Steve Brandt

of 3,336 slaughter barrows and gilts through North Dakota for the week of October 22, down from 14,243 for the week ending August 2. The great majority came from Manitoba, although a few were from other provinces.

At peak, 50,648 market hogs from Canada flowed into the U. S. through North Dakota border points during the first full week of January 2008.

But the arrival last month of COOL, which requires U. S. packers to classify their meat by country of origin, could dry up that flow, at least temporarily.

“It’s going to come to a crashing end,” said Andrew Dickson, Manitoba Pork Council general manager. “It’s dropping like a stone.”

The two largest U. S. buyers of live hogs from Canada, Smithfield Foods and Hormel Foods Corp., say they will no longer accept Canadian pigs imported directly for slaughter.

Smithfield owns the John Morrell and Co. plants in Sioux City, Iowa and Sioux Falls, South Dakota, which traditionally import large numbers of Canadian hogs.

Mohr said his co-op still has “a few little avenues left to us to sell bacon hogs into the U. S.”

Overall, though, COOL is putting the brakes on Manitoba’s pork trade with the U. S.

“The slaughter market south has pretty much come to a halt,” said Steve Brandt, owner of Steve’s Livestock Transport, which ships to the U. S. out of Blumenort.

Prairie packers

The problem now is finding a home for the pigs that can’t go south.

John Carney, vice-president of live procurement for Maple Leaf Meats, has been getting calls from producers asking to deliver to the company’s plant at Brandon.

The Brandon plant has almost finished ramping up a second shift, giving it a slaughter capacity of 86,000 hogs a week. It now kills “just north of 80,000,” Carney said.

But Maple Leaf receives hogs almost exclusively from in-house producers, leaving little room to buy pigs on the spot market.

“If you’re asking me if Maple Leaf in Brandon can take on an extra 15,000 or 20,000 extra pigs a week, the answer is, sadly, no,” Carney said. “We’ve got to honour our contracts first.”

The only other large federally inspected hog packer available is Olymel in Red Deer, Alta. Some Manitoba producers have reportedly shipped there recently.

But Olymel has its own producers to deal with and isn’t a silver bullet for Manitoba.

“When you’ve got this kind of an event, one packing plant cannot solve it,” said Carney.

Mohr warned of a possible crunch in December when the number of hogs will exceed the shackle space available. At that point, some tough decisions will have to be made.

“If the U. S. market does not open up, there are not enough hooks in Western Canada to kill all the hogs,” said Mohr.

“I believe that we may see some butcher hogs having to be put down in a humane fashion due to the fact that there’s going to be nowhere to get them killed.”

“Contracts cancelled”

However, others say the situation isn’t quite that dire.

“It’s not a good situation but it’s not a euthanize-market-hog situation, in my opinion,” said Marni Donetz, a Manitoba Agriculture, Food and Rural Initiatives livestock analyst.

Both Donetz and Carney encouraged producers to seek out other smaller U. S. plants who may still take Canadian hogs, even if they are further afield and may offer less money.

So far, shipments of other pigs to the U. S. appear to be holding steady.

“There’s no change on early weanling movements and on feeder pig movements. They’re staying the same,” Brandt said.

But that may change, too, once a six-month COOL phase-in period ends. Smithfield, for example, says it will not accept animals born in Canada and finished in the U. S. after March 2009.

Weanling producers this past spring were already reporting cancelled delivery contracts by U. S. finishers in anticipation of COOL. That trend is accelerating, according to Mohr.

“What you’re seeing now is a wave of isowean producers that have had their contracts cancelled and deciding to empty their barns,” he said.

“The rate of emptying barns that were built to sell weanlings into the U. S. market appears to be significant.”

Industry observers predict U. S. packers will once again accept pigs from Canada after they figure out how to deal with COOL regulations.

Whether that will come in time to rescue Manitoba producers is difficult to say right now.

“There’s not a doubt in my mind that by the middle of ‘09 we’re going to be shipping back into there again,” said Brandt.

“Having said that, how long can our producers hang on? Can our guys weather that storm? I’m not sure about that.”

Harsh as it sounds, fewer producers may be the only answer for an industry built on the assumption that the U. S. market would always be there.

“There’s just going to have to be a lot less pigs if nothing happens,” said Neil Couling, hog procurement manager for P. Quintaine and Son near [email protected]

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