Behind the Lines - December 2012

Monday, December 3, 2012

Early in 2012, the American pork industry, bruised by a federal ethanol policy that had driven the cost of feed to barely tolerable levels, turned towards a familiar target when times are tough – their counterparts north of the border.

That was before the worst drought in 30 years took hold in the American Midwest and drove feed costs even higher across the continent. American pork producers are watching Canadian producers and governments carefully for signs that the creative aid packages that pork producers are looking for might break trade rules. But what about subsidies to American producers?

This issue's cover story, by senior staff editor Don Stoneman, looks at the issues between Canada and the United States and examines the arcane system of payments that grain growers – and non-grain growers for that matter – receive in the United States.  

Not all pork producers are able to take advantage of these payments directly and defenders of the program argue that they don't subsidize pork production anyway. But a Canadian economist argues strongly that, when a farmer gets a cheque for selling his grain into the market and a second cheque over and above the grain's market value, there is a strong incentive to keep more land in production. Defenders of that system, however, claim that these payments don't subsidize pork production in any way. This story starts on page 6 and features a startling example of American pork industry leaders who are taking advantage of a different kind of "pork," the kind that is associated with cheques from Washington.

The backdrop to this is Canada's admittance to Trans-Pacific trade talks: negotiations that producers hope will result in new markets for the production from pig farmers. There is a silver lining in an otherwise cloudy figure outlook. BP

ROBERT IRWIN