Second Look

The key questions behind the COOL challenge

Some time next summer, a WTO panel will likely issue its findings on the Canadian-Mexican challenge to U.S. country-of-origin labelling. Here are some of the main arguments the panel will consider


Trade law can bring to mind Bill Clinton’s famous defense, “It depends on what the meaning of the word is is.”

Questions like “define the word ‘necessary’ in this context” or the Australian position that “the second sentence of TBT Article 2.2 elaborates on the meaning and fundamental discipline of the first sentence” seem eerily similar.

Ontario’s feed cost competitiveness

The corn price here surged, but not as much as in Iowa, bringing pork production costs in this province closer to in line with the Cornbelt

by Randy Duffy

The rise in feed costs during the last half of 2010 and into 2011 has the pork industry concerned. Much of the blame for the increase in corn prices is the volume of corn used in ethanol production. The latest estimate by the USDA has ethanol using 38 per cent of the 2010/2011 U.S. corn crop.

The ideal situation would be if the ethanol producers would use alternatives to corn as their feedstock source. However, this is not probably going to happen any time soon.

How concerned should the pork industry be with the level of imports?

Pork imports have risen from about 31 per cent of consumption volume in 2005 to 44 per cent in 2009. And imports fetch a higher price than exports do


Since 2005, annual per capita pork consumption in Canada seems to have stabilized at 23-24 kilograms per person. The one exception was in 2007 when it increased to 25 kilograms. These figures are on a carcass basis.

Retail sales in Canadian grocery stores for the 2005-2007 period show that the majority of pork purchased by Canadians can be classified as fresh rather than further processed.

Second Look: Downsizing the Ontario pork industry: how small is too small?

If production continues to decrease, then at what point does Ontario production become too low to support the viability of the current Ontario processing sector capacity?


The Ontario pork industry has undergone a significant reduction in production. The breeding herd has shrunk by 109,000 sows in six years. This is a decline of 25 per cent since the peak of 433,300 sows in April 2004.

Second Look: A financial lesson to be learned from the hog crisis

Two key ratios that give a clue as to why the Canadian hog
industry has been hit harder than its U.S. counterpart


The George Morris Centre has an intensive management program called CTEAM for Canadian farmers, which has some people who teach aspects of managerial accounting. One aspect is a different way to measure financial risk on farms.

One of my colleagues and I are using this approach in a forthcoming study for a number of financial institutions. The study provides some interesting insights about the Canadian hog industry as it went into the past two plus years, which I’d like to share in this article.

In my experience, many people define leverage as debt/equity (D/E) or debt/assets.

Second Look: The Canadian Hog Industry’s Plan for Success


Hog production practices and productivity improvements, as well as the exports of live animals and pork meat have been a Canadian success story for the past two decades.

Before the 1990s, Canada produced primarily for its domestic and the American market.  However, commencing in the mid 1990s, a steady rise of exports to other world markets became so significant that by 2008 they represented over 70 per cent of the total exports; more than double those going to the United States.

Second Look: It’s time for the pork industry to come together

The industry must change to be sustainable, says the chair of Ontario Pork. And, with governments coming on side, it must speak with a more united voice 


The underlying economic fundamentals of the pork industry have changed long-term.  
The Canadian dollar will remain high against its American counterpart because of the massive borrowings undertaken by the U.S. Treasury, along with Canada’s status as an oil-producing country. At present, the Canadian dollar is strong and producers here are suffering markedly more than U.S. producers have for over three years. The surviving industry must be prepared to deal with this reality.

Second Look: The misnamed swine flu and the CBC’s lame response

The double talk from the CBC brass and other media outlets about
the misnomer for H1N1 is costing Canadian hog producers somewhere
between $8 and $12 million a week


I guess some people still question whether the misnamed swine flu has affected the market for pork. The chart for July futures prices has a gap in late April, when the outbreak occurred. July futures were trading in the US$72-$75 range before the gap. After, it looks like a map to Florida, dropping rapidly to the $65 range and bottoming out at $57.50. That makes the difference between current prices around $125-$130, equivalent to over $170 in Canada.

SECOND LOOK: Where is the best place to raise pigs?

Low-cost feed grains are not the only factor giving one region the edge over another. Exchange rates, market access, environmental legislation and government policy can be equally important



Do you remember the buzz about Western Canada a few years back? This part of the country was going to take over the pig business primarily because of low-cost grains.

When Canada discontinued the Crow and Feed Freight Assistance programs, feed grains became relatively inexpensive in the West. The Crow freight subsidy made grain expensive in the Prairies and the Feed Freight Assistance program subsidized feed grain movement to Eastern Canada.