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Pork suffering indirect trade woes

Canada’s canola producers have been in the headlines, but Manitoba’s pork sector says it has been fighting against Chinese tariffs bubbling over from the U.S.

Manitoba’s pork sector wants more attention to its own trade issues with China.

The canola sector has dominated the agricultural headlines since sales to China ground to a halt earlier this year.

But George Matheson, Manitoba Pork Council president, says pork producers have been fighting the impact of Chinese tariffs for a year.

Why it matters: Canola isn’t the only commodity fighting trade issues. The pork sector says it is paying the price for American actions.

George Matheson

George Matheson
photo: Manitoba Pork Council

“We’ve been feeling the brunt of these trade relations for a lot longer than canola has,” he said.

China is a major market for local companies like HyLife Foods, but the trade issues in question actually stem from south of the Canada-U.S. border. Canada’s pork sector has taken indirect hits from low U.S. hog prices, something commonly attributed to trade spats with countries like China and Mexico.

In May 2018, U.S. President Donald Trump introduced tariffs against Chinese steel and aluminum, prompting China to retaliate with an extra 25 per cent duty against pork products, according to a June 2018 report from the USDA Foreign Agricultural Service. Those tariffs eventually rose to 62 per cent by July 2018.

Those tariffs flowed directly on to Canadian producers, due to the integrated North American hog market, Math­eson said.

“Canadian pork producers take the U.S. pork price as their price,” he said.

That price is ordinarily a “pretty good reflection” of the market, according to Matheson, but also created a direct stream for tariff impacts in light of the U.S. trade conflicts.

The sector has taken a similar hit with Mexican tariffs against U.S. pork. At the same time as Chinese tariffs rose to 62 per cent, Mexico had also instituted a 20 per cent retaliatory tariff.

Manitoba producers keenly felt the price drop last year. In September 2018, Manitoba Pork Council general manager Andrew Dickson estimated the hog cash price at $105/cwt, far below the $140-$160/cwt break-even, the Manitoba Co-operator reported.

Unlike the U.S., however, Matheson argued, Canadian producers saw no relief from their federal government. The American government announced two rounds of relief payments in 2018 to ease the economic hit to farmers.

Canadian pork producers approached the federal government for similar relief, Matheson said, but were denied.

The U.S. maintained its tone this last week, after news that both China and the U.S. would be ratcheting up their respective tariffs. China hiked tariffs on $60 billion of U.S. goods May 13, following a May 10 announcement that the U.S. would raise tariffs on $200 billion of Chinese goods. The new Chinese tariffs come into effect June 1.

The U.S. federal government followed up the announcement with a promise of support to farmers.

Back in Canada, Matheson has since been irked by news that the canola sector would be getting some help from the government. In late April, the federal government announced that it was over doubling the Advance Payments Program cap for canola farmers to $1 million from $400,000, $500,000 of which could be interest free.

“I hope they get something, but fair is fair,” Matheson said. “Pork deserves something too.”

Agriculture and Agri-Food Canada acknowledged the pork industry’s challenges though most of 2018, although they noted that prices began to rise in mid-September 2018 and, “by 2019 reached highs not seen since 2014, as hog production losses in China due to African swine fever increased pork demand and hog prices.”

The Manitoba Pork Council did write to the federal agriculture minister’s office for support Sept. 4, 2018, a representative said over email.

Agriculture and Agri-Food Can­ada representatives pointed to business and risk management supports built into the Canadian Agricultural Partnership, the successor to Growing Forward 2 and other industry-based funding programs and expected growth from the CPTPP trade deal.

“While it is too early to attribute trade increases to the CPTPP, early signs are encouraging,” the department said over email.

The pork sector has not approached the government again for relief, Matheson said.

About the author

Reporter

Alexis Stockford is a journalist and photographer with the Manitoba Co-operator. She previously reported with the Morden Times and was news editor of  campus newspaper, The Omega, at Thompson Rivers University in Kamloops, BC. She grew up on a mixed farm near Miami, Man.

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