CPC president maintains hope for battered hog market

Sunday, February 17, 2008

by Kate Procter

Clare Schlegel, President, Canadian Pork Council, addressed this issue at the Feb. 13 Ontario Pork Industry Council’s “Making Tough Decisions in Tough Times” conference. While he said there is a future for Ontario’s pork industry, he stressed the need to improve efficiency and reduce costs in order to compete.

Schlegel said while it may seem inconceivable, the idea that Ontario’s hog industry could disappear is not impossible. He used the dissolution of the province’s textile manufacturing industry in the last century as an example.

There is a possibility Canada’s pork industry’s woes are symptoms of “Dutch disease,” a term first used to describe the 1970s decline in manufacturing in Holland after the discovery of natural gas in the North Sea, he said. It refers to the deindustrialization of a nation’s economy when the discovery of a natural resource increases the value of a nation’s currency. This makes manufactured goods less competitive with those from other nations and results in increased imports and decreased exports. In Canada, an increased demand for both Canadian minerals and oil, growth in pork imports and the United States’ increased market penetration worldwide may suggest the presence of this “disease.”

Alternatively, the current circumstances could just be a normal low in the hog cycle as occurred in 1998, he said.

The dilemma facing Canadian producers is determining which scenario is realistic, he said, pointing out each will require a different approach to weather the effects. He noted that historically, long-term thinking and “faith in the future” has worked, but the world is changing and Canada is not as competitive.

Despite its source, Schlegel suggested the current problem would take immediate, transition and long term measures to solve:

• Immediately, producers must get through the crisis by developing export markets and reducing regulatory barriers.
• Over the next three to five years, the industry will have to lower costs and improve efficiency throughout the production chain. Cost and revenue must be in line with major competitors; otherwise investment will leave and go to the United States.
• In the long term, the government must recognize that the value-added sector is threatened, improve import and export rules and ensure the country’s regulatory environment remains competitive.

Schlegel recommended industry associations develop common standards and competitively position the Canadian industry by emphasizing food safety, consistent supply and traceability.

In the meantime, U.S. protectionism, dumping rules in the World Trade Organization and North American Free Trade Agreement and differing agricultural policies challenge Canadian producers. However, Schlegel remained optimistic, stressing that the industry can compete but to do so Canadians must stand up for their rights in an integrated North American market. BF