Livestock and Products Semi-Annual in Canada

An Expert's View about Animal Husbandry and Support Services in Canada

Posted on: 8 Mar 2010

Canada’s cattle and swine herds are forecast to continue on a downward trend with the ongoing increased strength of the Canadian dollar dampening export potential. The beef cattle herd dropped to 11 million head, down 1.4 percent with current indications that a moderate expansion may begin in 2011 or 2012.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 3/2/2010 GAIN Report Number: CA0008 Canada Livestock and Products Semi-annual Livestock Update Approved By: Robin Tilsworth Prepared By: Staff Report Highlights: Canada?s cattle and swine herds are forecast to continue on a downward trend with the ongoing increased strength of the Canadian dollar dampening export potential. The beef cattle herd dropped to 11 million head, down 1.4 percent with current indications that a moderate expansion may begin in 2011 or 2012. The swine herd is pegged at 11.6 million head, down another 4.5 percent from the year before. A further decline to about 12.7 million head is forecast by the end of 2010 in part aided by the C$75 million Hog Farm Transition Program. The aim of the program is to reduce the herd by the equivalent of 250,000 sows (1.3 million in inventory January 2010) via payments requiring vacating production facilities for three years. Canada?s cattle exports totaled 1.067 million head in 2009, down from 1.6 million head in 2008. The cattle export forecast for 2010 is 1.15 million head. Total 2009 beef imports, up 7 percent to 247,032 mt are expected to climb further to 290,000 mt in 2010. Canadian beef exports fell 3 percent in 2009 to 480,294 mt due to drop in shipments to the United States and are expected to expand to 490,000 tons in 2010. Exports of hogs totaled almost 6.4 million head in 2009, down from 9.4 million in 2008 with the 2010 forecast pegged at 6.0 million head. After totaling 1.12 mmt in 2009, in 2010 the pork exports are forecast up slightly to 1.13 mmt. 1 Executive Summary: The Canadian beef cattle herd dropped to 11 million head, down 1.4 percent and the lowest in 15 years as of January 2010. Current indications are that a moderate expansion may begin in 2011 or 2012. Canada?s cattle exports totaled 1.067 million head in 2009, down 33 percent from the 1.6 million head exported in 2008. The forecast for 2010 is 1.15 million head, up slightly reflecting tightened supply in the United States as well as some stability, if not softening, in the value of the Canadian dollar. Total 2009 beef imports, up 7 percent to 247, 032 mt, did reflect the recessionary demand for an increase in lower priced cuts from New Zealand, Australia and Uruguay and increased buying power of the stronger Canadian dollar. Some rebound in the economy is expected to spur increased beef imports to 290,000 mt in 2010. Canadian beef exports fell 3 percent in 2009 to 480,294 mt due to drop in shipments to the United States. Although world demand is still recovering and fluctuations in the value of the Canadian dollar are negative strains on exports, overall exports are expected to expand to 490,000 tons in 2010. As of January 2010, the swine herd is pegged at 11.6 million head, the lowest in 12 years and down 4.5 percent from the year before. A further decline to about 12.7 million head is forecast by the end of 2010. Exports of hogs totaled almost 6.4 million head in 2009, down 32 percent from 2008. The largest decline was in slaughter animals, totaling 1.1 million head compared to 2.3 million head in 2008. Due to the continued strong Canadian dollar the forecast for 2010 is 6.0 million head. After totaling 1.12 mmt in 2009, 2010 the pork export are forecast up slightly to 1.13 mmt reflecting the reopening of the Chinese market as well as overall expectations that world wide pork consumption will trend upward as recessionary pressures soften and consumers look for lower priced meats. Details of the C$75 million Hog Farm Transition Program (HFTP) were announced in December 2009 with the first three (of four) tranches resulting in a total reduction of 671,250 head of which 105,358 are sows. The aim of the program is to reduce the herd by the equivalent of 250,000 sows. The highest proportional reductions are in the small producing provinces of British Columbia and the Atlantic region. The largest reduction, Ontario, represents about 3.6 percent of the provinces total 2009 production. The last tranche is in March 2010. These payments require vacating production facilities for three years. 2 Commodities: Animal Numbers, Cattle Meat, Beef and Veal Production: Cattle and Beef The Statistics Canada yearend livestock report adjusted some cattle numbers in 2008 (slight drop in calf production) as well as in 2009. The cattle herd is pegged at just over 13 million head, larger by about 300,000 head than had earlier been forecast but the lowest in 15 years. Between January 1, 2009 and January 1, 2010, the beef herd dropped to 11 million head, down 1.4 percent while the dairy herd remained about flat (0.2 percent decline) at about 1.97 million head. Reductions in the herds in Alberta, Manitoba, British Columbia, Quebec and the Atlantic provinces totaled more than the increases in Saskatchewan and Ontario. Based on the new data, the calf crop forecast for 2010 have been adjusted down to 4.98 million head compared to 5.05 million at the last forecast with ending inventories pegged at 12.7 million head compared to the earlier forecast of 12.5 million head. The retraction of the herd size has slowed, about 1.2 percent decline since January 2009, but the number of breeding heifers continued to decline, a total of almost 4 percent for the year. Some late-year 2009 strengthening of heifer prices and some reprieve from constant feed price increases are improving the outlook for producers. However, concerns about continued drought conditions and feed quality in 2010 as well as the continued strong (but at least more stable) Canadian dollar are working against herd expansion. Current indications are that a moderate expansion may begin in 2011 or 2012. A stronger world wide rebound is consumer demand and exports may pull the process along faster. Statistics Canada indicated that 2009 total slaughter reached almost 3.7 million head, down about 175,000 head from the pervious estimate. Early data show slaughter down about 4 percent in the first six weeks of 2010. The total slaughter forecast for 2010 is adjusted from 3.7 million head to 3.62 million head although if export demand for beef picks up, the slaughter forecast may be on the low side. 3 Source: Statistics Canada Cattle Market Prices Despite tighter supplies the fed steer prices in Canada have continued on a downward trend throughout 2009 and early into 2010 but tightening supplies in the United States may result in some upward movement in 2010. Bred heifer prices rallied moderately in late 2009 but the increases have not been sustained. Cattle producers continue to voice concern about the price-dampening effect of continued packer concentration and on the cost of disposing of specified risk materials (SRM) in the continued aftermath of the 16 detections of bovine spongiform encephalopathy (BSE) which began in 2003. The producers argue that the stricter Canadian requirements cost them about $25 more per head than the disposal requirements in the United States. 4 Alberta Fed Steer Prices monthly averages C$/cwt/live 2003 2004 2005 2006 2007 2008 2009 2010 Jan 114.17 82.36 85.26 95.39 87.60 81.27 86.30 78.34 Feb 115.13 80.03 88.68 89.32 90.19 83.42 86.83 Mar 110.29 85.81 83.19 87.51 97.59 85.29 93.38 Apr 108.55 84.25 80.14 85.22 101.87 87.93 98.85 May 106.31 80.03 79.54 85.03 99.07 90.86 89.85 June 65.44 71.73 80.42 86.92 88.21 90.18 86.68 July 37.80 70.64 84.77 85.84 84.39 95.55 84.59 Aug 39.02 66.69 85.03 85.23 86.52 96.71 82.58 Sept 73.09 78.39 85.19 86.01 84.36 93.42 82.62 Oct 79.07 79.12 86.57 85.69 78.55 93.36 80.98 Nov 80.45 79.18 91.98 84.97 79.46 95.16 78.76 Dec 82.06 85.32 96.42 85.68 84.33 87.69 77.49 Annual 84.28 78.63 85.60 86.90 88.51 90.07 85.74 Source: Statistics Canada 5 Source: Statistics Canada Consumption: Beef and Veal Domestic per-capita beef consumption is expected to stabilize and show signs of expansion by late 2010 prompted by the economic recovery and soft prices. The total 2010 consumption forecast is revised 10 1.015 mmt to reflect new data for earlier years. Although total meat consumption has declined with the recession, beef has been the favored red-meat for consumption given some effect of H1N1 on consumer perceptions of pork although lower pork prices coupled with shoppers seeking increased value puts downward pressure on beef prices. Total CY 2009 consumption is estimated to have declined to about 30 kilograms carcass weight basis per capita. In 2008, per capita beef consumption declined to 30.32 kilograms carcass weight basis, a 4.7 percent decrease from 31.7 kilograms in 2007 and the fifth decrease in six years. Beef consumption increased moderately in 2003 after the BSE-related market disruption resulted in additional beef supplies on the Canadian market at reduced prices. Canadian Per Capita Beef & Veal Consumption kg/person, CWT Year kg/person 2003 33.63 2004 31.98 2005 31.35 2006 30.92 2007 31.70 6 2008 30.32 2009* 30.00 2010* 31.00 Source: Statistics Canada, *Post forecasts Trade: Cattle Trade Canada?s cattle exports totaled 1.067 million head in 2009, down 33 percent from the 1.6 milion head exported in 2008. Factors attributed to this decline include the strengthening of the Canadian dollar, the shift in the recession market in the United States toward lowest priced cuts, and some uncertainty surrounding requirements under the Country of Origin Labeling (COOL) regulations. The forecast for 2010 remains unchanged at 1.15 million head, up slightly from 2009 reflecting tightened supply in the United States as well as some stability if not softening of the value of the Canadian dollar. Need to fill U.S. feedlots may also push the numbers up later in the year. Canadian cattle import forecast is reduced to 50,000 head in 2010, or about the same as the 2009 imports of 54,000 head. Beef and Veal Imports Recent data show imports of beef and veal increased in 2009 by about 7 percent despite some decreased demand, at least on the high end, primarily U.S. trade, due to the recession. Beginning in March 2009 the Canadian dollar strengthened which made the imported beef more affordable. Beef imports did reflect the recessionary demand for an increase in lower priced cuts from New Zealand, Australia and Uruguay. Rebounding of the economy is expected to spur increased beef imports with the 2010 forecast at 290,000 mt. This forecast is unchanged. Canada operates a tariff rate quota (TRQ) on beef but it does not apply to imports from the United States, Mexico, and Chile under free trade agreement provisions. The global minimum access commitment for beef and veal is 76,409 MT within which there are two country-specific reserves: 29,600 MT reserved for imports from New Zealand and 35,000 MT reserved for imports from 7 Australia. The balance of the TRQ, 11,809 MT (known as the MFN reserve), is reserved for imports from all other eligible suppliers, including those from New Zealand and Australia once their country- specific allocations are filled. Beef imported in excess of the minimum access commitment incur the higher ?over access commitment? rate of 26.5 percent. For the purpose of administering the beef and veal TRQ, the quota year is the calendar year. Following the detection of BSE in Alberta in 2003, the Government of Canada moved to restrict the issuances of supplementary beef imports from non- NAFTA suppliers because of beef surpluses in Canada. As a result, imports from these suppliers have been lower since that time. Canadian Beef and Veal Imports: Fresh, Chilled, Frozen, Prepared and Preserved In metric tons, carcass weight equivalent* 2004 2005 2006 2007 2008 2009 World 123,088 151,000 179,567 240,918 230,195 247,032 United States 28,295 60,360 113,482 147,042 171,411 163,807 New Zealand 43,318 42,265 36,778 35,788 30,866 42,146 Australia 11,520 11,395 13,897 16,349 13,173 16,955 Uruguay 35,002 27,144 9,923 31,935 6,832 16,803 Brazil 3,211 7,383 3,715 7,964 5,764 5,651 All Others 1,743 2,453 1,773 1,840 2,150 1,670 Share United States 23% 40% 63% 61% 74% 66% New Zealand 35% 28% 20% 15% 13% 17% Australia 9% 8% 8% 7% 6% 7% Uruguay 28% 18% 6% 13% 3% 7% Brazil 3% 5% 2% 3% 3% 2% All Others 1% 2% 1% 1% 1% 1% Source: Derived from World Trade Atlas *Fresh, Chilled and Frozen converted to CWE at 1.4 *Prepared and Preserved converted to CWE at 1.79 8 Source: Derived from Global Trade Atlas. Source: Derived from Global Trade Atlas. Beef and Veal Exports Canadian beef exports fell by 3 percent in 2009 to 480,294 mt due to drop in imports from the United States. However, aggressive efforts by the government to pry open markets closed due to lingering concerns about BSE resulted in increased exports to Hong Kong, Japan, Taiwan and Vietnam. Marketing campaigns by the Canada Beef Export Federation have also expanded in these markets. Although world demand is still recovering and fluctuations in the value of the Canadian dollar are negative strains on exports, overall exports are expected to expand to 490,000 tons in 2010. This forecast is unchanged. 9 Canadian Beef and Veal Exports: Fresh, Chilled, Frozen, Prepared and Preserved In metric tons, carcass weight equivalent* 2004 2005 2006 2007 2008 2009 World 602,578 596,306 476,564 457,468 493,818 480,294 United States 4 9 9 , 1 1 0 5 1 5 , 7 98 405,292 380,946 402,459 389,521 Mexico 9 0 , 4 2 7 5 7 ,126 45,637 47,361 48,489 48,035 Hong Kong 1 2 7 1 3 , 0 35 11,117 10,973 10,048 12,663 Japan 0 7 3,062 4,609 6,905 11,313 Taiwan 0 0 0 570 1,907 3,926 Vietnam 0 0 106 286 770 2,383 Philippines 857 207 347 367 8,364 2,251 Macau 8,908 6,576 7,937 8,208 7,371 2,108 Indonesia 0 0 0 210 399 2,080 Russia 0 0 0 39 512 1,084 France 830 1,057 875 868 893 752 Cuba 14 6 370 116 1,492 556 Others 2,304 2,495 1,821 2,916 4,208 3,622 U.S. Share % 83% 86% 85% 83% 81% 81% Source: Derived from World Trade Atlas * Converted to CWE at 1.4 10 Policy: Canada Launches Two WTO Disputes In late 2008 Canada and Mexico filed dispute at the World Trade Organization (WTO) on the interim rule of the Country of Origin Labeling (COOL). Consultations were held twice and a new case was filed in May 2009. On November 19, 2009, at the request of Canada and Mexico, the WTO Dispute Settlement Body established a single panel to consider the complaints regarding U.S. mandatory COOL. The process to select panelists is still underway. The substance of Canada and Mexico?s claims remain the same, and include allegations of inconsistency with the General Agreement on Tariffs and Trade 1994 (national treatment and transparency provisions), the Agreement on Technical Barriers to Trade (technical regulations provisions) or in the alternative, the Agreement on the Application of Sanitary and Phytosanitary Measures, and the Agreement on Rules of Origin (Article 2). In July 2009, Canada requested the establishment of a WTO dispute settlement panel on the issue of South Korea?s continuing ban on the importation of Canadian beef. South Korea has banned Canadian beef since May 2003 after bovine spongiform encephalopathy (BSE) was discovered in an Alberta cow. Before the ban, South Korea was Canada?s fourth-largest beef export market, valued at C$50 million in 2002. In May 2007, the World Organization for Animal Health (OIE) officially categorized Canada as a ?Controlled Risk? country for BSE. The WTO panel, which was formed in November 2009, is asked to determine whether South Korea?s continuing ban on Canadian beef is consistent with its international trade obligations under the WTO, specifically several articles of the Sanitary and Phytosanitary Agreement the General Agreements on Tariffs and Trade . It is Canada?s view that South Korea?s continuing ban is a violation of its WTO obligations in that the ban is not based on the relevant international standards or on science, and that it is discriminatory among WTO members and restricts trade more than necessary. Alberta Ends Non-refundable Check-Offs Legislation ending non-refundable check-offs will take effect April 1, 2010 in the province of Alberta, home to about 40 percent of the Canadian cattle herd. Several other provinces already have refundable or partially refundable (national part non-refundable) check-offs (British Columbia, Manitoba, Saskatchewan). The legislation was spurred by come cattle producers who felt their $3/head check off funds were not gleaning results since the detection of the first case of BSE. Also there was tension between the cow-calf operations and the feedlots and whether funds to one organization, the Alberta Beef Producers (ABP) could promote all interests. The change will effect four organizations: Alberta Beef Producers, Alberta Pork, Alberta Lamb Producers and the Potato Growers of Alberta. Several other provinces already have refundable or partially refundable (national part nonrefundable) check-offs (British Columbia, Manitoba, Saskatchewan). No one is sure what the actual effect of the new refundable system will be on the $12-13 million collected annually by the ABP. For each $3 collected, $1 will still be remitted to the national agency 11 which funds the Beef Information Centre, the Canadian Beef Export Federation (CBEF) and the Beef Cattle Research Council. ABP sends part of the remaining funds to the Canadian Cattlemen?s Association. The ABP has announced that their budgets will be based on the pervious year?s funds but for this transition year they have reduced their budget from $8 million to $5 million. Observers are watching to see how the relatively few feedlot owners react to the new flexibility which could change the size and direction of the ABP. Production, Supply and Demand Data Statistics: 2008 2009 2010 CANADA Market Year Market Year Market Year Begin: Jan 2008 Begin: Jan 2009 Begin: Jan 2010 USDA New USDA A O New USDA New ld Post ost nimal Numbers, Cattle Official Post Official Post O Old Pfficial Data D D Post ata ata D Dataata Data Data Data Total Cattle Beg. Stks 13,895 13,895 13,180 13,180 13,180 12,820 12,820 13,015 Dairy Cows Beg. Stocks 984 984 978 978 979 975 975 981 Beef Cows Beg. Stocks 4,982 4,982 4,650 4,655 4,650 4,550 4,550 4,471 Production (Calf Crop) 5,299 5,288 5,140 5,140 5,110 5,050 5,050 4,980 Total Imports 49 49 50 50 54 50 60 50 Total Supply 19,243 19,232 18,370 18,370 18,344 17,920 17,930 18,045 Total Exports 1,598 1,598 1,120 1,120 1,067 1,200 1,150 1,150 Cow Slaughter 792 792 650 650 620 575 575 570 Calf Slaughter 320 310 330 330 285 330 330 300 Other Slaughter 2,732 2,747 2,900 2,900 2,800 2,895 2,800 2,750 Total Slaughter 3,844 3,849 3,880 3,880 3,705 3,800 3,705 3,620 Loss 621 605 550 550 557 500 550 550 Ending Inventories 13,180 13,180 12,820 12,820 13,015 12,420 12,525 12,725 Total Distribution 19,243 19,232 18,370 18,370 18,344 17,920 17,930 18,045 All data in 1,000 head 2008 2009 2010 CANADA Market Year Market Year Begin: B Market Year Begin: Jan 2010 egin: Jan 2008 Jan 2009 USDA New USDA USDA New Meat, Beef & Veal O f f i c i a l P o s t O O New ld Post f f icia D D P Old Post ost Official ata D Post ata ata Data l Data Data Data Data Slaughter (Reference) 3,844 3,849 3,880 3,950 3,705 3,800 3,705 3,620 Beginning Stocks 45 45 35 35 34 50 50 36 Production 1,288 1,288 1,300 1,325 1,245 1,275 1,275 1,215 12 Total Imports 230 230 270 235 247 290 290 290 Total Supply 1,563 1,563 1,605 1,595 1,526 1,615 1,615 1,541 Total Exports 494 494 475 510 480 490 490 490 Human Dom. Consumption 1,034 1,035 1,080 1,050 1,010 1,090 1,090 1,015 Other Use, Losses 0 0 0 0 0 0 0 0 Total Dom. Consumption 1,034 1,035 1,080 1,050 1,010 1,090 1,090 1,015 Ending Stocks 35 34 50 35 36 35 35 36 Total Distribution 1,563 1,563 1,605 1,595 1,526 1,615 1,615 1,541 All data in 1,000 head (slaughter) or 1,000 metric tons carcass weight equivalent (all others) Commodities: Animal Numbers, Swine Meat, Swine Production: Swine and Pork The Statistics Canada yearend livestock report adjusted the pig crop numbers ups slightly in both 2008 and 2009. As of January 2010, the swine herd is pegged at 11.6 million head, larger by about 250,000 head than had earlier been forecast but the lowest in 12 years. The breeding herd showed a further drop of 4.3 percent. The industry is showing further retraction with the size of the remaining operations increasing in size. The number of hog producers dropped to 7,360 at the end of 2009 with the number of hogs per farm increased from 1,482 to 1,580, or 6.7 percent, indicating a continued exodus of mixed farms and concentration of managed hog operations. The production forecast for 2010 is unchanged at 28 million head reflecting continued downsizing in the industry as returns remain below the cost of production and some producers opt to accept the new government buyout program. The 2009 slaughter total was adjusted according to the Statistics Canada data to 21.8 million head. The 2010 forecast is reduced by 500,000 head to 21.2 million based on the adjusted herd size data. 13 Source: Statistics Canada Hog Market Prices Hog prices continued well below previous years throughout most of 2009 but perked up in December suggesting a strengthening trend in 2010 due to tighter supplies and improving consumer demand for pork as a lower priced meat. Producers continue to face prices below the cost of production with one estimate from Manitoba indicating the margin remains C$13/head below the break even point and C$33/head below the amount needed to cover debt loads. Manitoba Slaughter Hog Prices monthly averages C$/cwt/index 100 dressed hogs 2004 2005 2006 2007 2008 2009 Jan 56.25 72.89 54.83 58.55 41.70 59.28 Feb 65.77 71.96 55.62 64.83 48.02 60.43 Mar 71.21 69.84 57.38 61.52 45.56 61.34 Apr 72.12 70.94 54.64 52.67 51.40 60.93 May 84.82 78.23 63.24 68.64 65.36 59.34 Jun 87.09 70.45 69.03 65.63 62.51 57.76 Jul 85.28 68.99 66.78 62.75 63.42 57.25 Aug 83.91 69.98 68.00 63.92 73.47 47.20 Sep 77.11 66.88 64.58 56.10 63.68 47.80 Oct 76.66 63.98 51.58 48.35 61.56 46.29 Nov 71.67 59.21 59.40 41.00 55.07 48.55 Dec 74.84 58.29 59.04 44.27 54.98 54.33 Annual 75.75 68.47 61.18 58.18 57.23 55.04 Source: Statistics Canada. 14 Source: Statistics Canada. Source: Statistics Canada. 15 Consumption: Of the three major meats, beef, pork and chicken, over the last decade the share of pork in the Canadian per capita meat consumption is the only one that has decline. In 2000, pork represented 32 percent of total consumption and by 2008 it had dropped to 28 percent despite the fact that that other two are generally higher priced (chicken prices benefit from the supply management system). According to Statistic Canada, per capita pork consumption in 2008 declined 4.8 percent from 2007. The pork industry is battling against consumer perceptions that pork is not easy or fast to prepare and lack of perception that pork is a ?healthy? meat. Pork has also made limited inroads in the foodservice market. The expectation is that the 2009 figure will show a further decline, estimated at 22.9 kilograms per person, primarily due to the recession and overall downturn in meat consumption. Uncertainty about the linkage with H1N1 also pushed pork consumption down. With lower prices consumption is forecast to rise slightly in 2010. Canadian Per Capita Pork Consumption kg/person, CWT Year kg/person 2000 28.69 2001 28.94 2002 27.81 2003 25.10 2004 26.84 2005 23.03 2006 23.43 2007 24.84 2008 23.51 2009* 22.90 2010* 23.20 Source: Statistics Canada, *Post forecast 16 Trade: Hog Exports Total exports of hogs totaled almost 6.4 million head in 2009, up compared to earlier estimates by about 100,000 head, but down 32 percent from 2008. The largest decline was in slaughter animals, totaling 1.1 million head compared to 2.3 million head in 2008. Due to the continued strong Canadian dollar the forecast for 2010 is pulled down to 6.0 million head from the earlier forecast of 6.2 million head. Canadian Hog Exports to the United S tates 2006 2007 2008 2009 Type 1,000 % 1,000 Total 1,000 head % Total % 1,000 Total % Total head head head Feeder 6,013 69% 6,721 67% 7,036 75% 5,221 82% Slaughter 2,747 31% 3,281 33% 2,306 25% 1,141 18% Breeding 3 0% 2 0% 5 0% 2 0% TOTAL 8,763 10,004 9,347 6,364 Source: Global Trade Atlas 17 18 Source: Global Trade Atlas Pork Imports Canadian pork imports totaled 180,260 mt in 2009, up about 10,000 mt from the earlier estimate and down slightly from the 2008 record high of 194,541 mt. Total imports are forecast at 210,000 mt, up 10,000 mt and in line with a rebound in consumption as Canadian consumers continue to seek out value prices for protein. Canada: Pork Imports Units: metric tons, carcass weight basis* % change 2004 2005 2006 2007 2008 2009 09/08 World 1 0 4 , 9 7 7 1 3 9,445 145,452 170,984 194,541 180,266 -7% United States 1 0 1 , 6 5 0 1 2 9 , 8 1 8 137,490 164,483 186,920 173,902 -7% Chile 0 1 , 0 2 7 2,991 2,197 2,510 3,039 21% Denmark 1,727 6,814 3,493 1,272 3,008 1,347 -55% Finland 555 699 228 377 653 732 12% Italy 747 560 670 627 927 675 -27% All Others 297 528 580 2,028 523 571 9% * Converted to CWE at 1.3 Source: Derived from Global Trade Atlas 19 Source: Global Trade Atlas Pork Exports Pork exports fell slightly in 2009 to 1.12 mmt as the drop in exports to Russia were almost completely offset by gains in sales to the United States and Taiwan. For 2010 the export forecast is raised slightly to 1.13 mmt reflecting the reopening of the Chinese market as well as overall expectations that world wide pork consumption will trend upward as recessionary pressures soften and consumers look for lower priced meats. After significant fluctuations and a marked rise in 2009, the value of the Canadian dollar has been relatively stable, at a higher level, in the last few months. This stronger Canadian dollar is a drag on export potential and any further strengthening could hurt overall export competitiveness in 2010. Canada: Pork Exports In metric tons - carcass weight basis % change 2005 2006 2007 2008 2009 09/08 World 1,083,687 1,081,214 1,032,788 1,128,621 1,122,870 -0.5% United States 477,900 448,575 432,879 362,890 382,968 5.5% Japan 304,064 244,994 250,968 262,298 259,273 1.1% Korea, South 57,708 74,507 66,724 64,887 67,938 4.7% Russia 25,500 83,144 86,211 142,789 63,281 -55.7% Australia 44,304 48,389 52,434 45,959 61,651 34.1% Hong Kong 4,014 4,755 8,799 58,838 46,636 20.1% Philippines 10,105 7,769 11,315 32,358 45,312 40.0% Taiwan 12,262 6,578 6,307 17,138 34,639 102.1% Mexico 45,565 37,808 37,226 29,549 29,097 -1.5% 20 China 18,044 20,631 22,849 23,141 22,513 -2.7% South Africa 4,096 9,460 10,732 6,375 17,046 167.4% New Zealand 8,688 10,895 11,285 9,979 12,832 28.5% All Others 71,437 83,709 35,059 72,420 79,684 10.0% *Converted to CWE at 1.3 Source: derived from Global Trade Atlas Policy: Canadian Hog Buyout Program Launched Despite the 2008 program to reduce the breeding herd, producers appealed to the government for additional assistance arguing that returns to the swine industry were further hampered by the strengthening of the Canadian dollar, high feed prices, reduced consumer demand due to the mislabeling of the H1N1 virus as Swine Flu, and the U.S. Country of Origin Labeling laws. In mid- August, 2009 the Minister of Agriculture?s announced a new suite of three programs totaling C$92 million. The details became available in early December. The C$75 million Hog Farm Transition Program (HFTP) assists farmers who see no viable alternative but to cease hog production for three years. HFTP provides funding through a process of four tenders, the last of which requires bid submission no later than March 10, 2010. Just under C$14 million remains of total funds available. The aim of the program was to reduce the herd by the equivalent of 250,000 sows. The following table summarizes the results of the first three tenders. Because of the timing of the program (retroactive to April 1, 2009), some of the liquidated animals would have already been removed by the inventory numbers for January 1, 2010. The total reported for the first three tranches represents about 2.3 percent of the 2009 total pig crop/production. The highest proportional reductions are in the small producing provinces of British Columbia and the Atlantic region. The largest reduction, Ontario, represents about 3.6 percent of the provinces total 2009 production. Canada: Hog Farm Transition Program Successful Bid Summary (3 of 4 bids) P Bid rovince B Totalids Value Sows Up to 30 kgs Over 30 kgs Total C$ mil. British Columbia 10 $3.8 7,167 20,679 22,295 50,141 Alberta 41 $6.7 8,094 21,034 56,842 85,970 Saskatchewan 12 $7.2 16,032 26,415 19,435 61,882 Manitoba 59 $14.0 29,491 48,175 48,459 126,125 Ontario 161 $21.8 32,613 87,444 132,669 252,726 Quebec 36 $3.6 5,146 10,557 26,746 42,449 21 Atlantic Region 19 $4.4 6,805 12,728 32,744 52,277 TOTAL 338 $61.5 105,348 227,032 339,190 671,250 All swine numbers in head. Source: Agriculture and Agri-Food Canada, Statistic Canada The second tool made available is the Hog Industry Loan Loss Reserve Program (HILLRP) is a loan guarantee program that assists producers who wish to continue in hog production address their liquidity problems. Producers applying for the loan must demonstrate to lenders that their businesses are or can be viable as well as have a reasonable prospect for loan repayment. The Government of Canada will share loan loss risk with the commercial lenders. The loan terms will be negotiated between lenders and applicants and shall not exceed 15 years. Maximum loan amounts will be passed on number of animals produced in past year or tax year at rates of C$85 per market hog, C$30 per weaner and C$25 per iso weaner. Producers cannot receive benefits from both the HILLRP and the HFTP programs. On February 24, 2010, citing request from producers who need more time to develop business plans, the deadline for this program was extended from March 1 to March 26, 2010. The third part of the plan is the C$17 million International Pork Marketing Fund (IPMF) to bolster market development in critical markets and fund activities to capture greater value from export markets. In addition, the fund allocates resources towards resolving trade restrictions. This program is being carried out by Canada Pork International, the export promotion arm of the Canadian pork industry. The new suite of programs followed the 2008 Cull Breeding Swine Program. That program was announced in April 2008 to cover period of November 1, 2007 through November 1, 2008 and later extended to cover period to August 1, 2007. The program required producers to agree not to house breeding swine in at least one barn for a period of three years from the last cull date. The program resulted in a reduction of 110,000 breeding swine or about 7.3 percent of the total. The extension contributed at least 21,000 head to the total and the accounting for the last submissions may further add to the total. The program was aimed at a 10 percent reduction. Agreement Reached to Resume Pork Exports to China In the spring of 2009 China shut off imports of pork and hogs from countries affected by the H1N1 virus, including Canada. For Canada, pork shipments had reached a height of 23,000 mt in 2008. The Canadian Food Inspection Agency negotiated with their Chinese counterparts and on February 25, 2010 Canada announced that agreement on the wording of a veterinary certificate had been reached. Shipments are expected to resume immediately. 22 Canada Launches WTO Dispute In late 2008 Canada and Mexico filed dispute at the World Trade Organization (WTO) on the interim rule of the Country of Origin Labeling (COOL). Consultations were held twice and a new case was filed in May 2009. On November 19, 2009, at the request of Canada and Mexico, the WTO Dispute Settlement Body established a single panel to consider the complaints regarding U.S. mandatory COOL. The process to select panelists is still underway. The substance of Canada and Mexico?s claims remain the same, and include allegations of inconsistency with the General Agreement on Tariffs and Trade 1994 (national treatment and transparency provisions), the Agreement on Technical Barriers to Trade (technical regulations provisions) or in the alternative, the Agreement on the Application of Sanitary and Phytosanitary Measures, and the Agreement on Rules of Origin (Article 2). Production, Supply and Demand Data Statistics: 2008 2009 2010 CANADA Market Year Begin: Market Year Begin: Jan 2009 Market Year Begin: Jan 2010 Jan 2008 A USDA USDA New nimal numbers, N USDA ew Post Sw Official O Old Post New Post fficial O Old Post fficial ine D Data ata D Data Dataata D D Post ata ata Data Total Beginning Stocks 13,810 13,810 12,180 12,181 12,180 10,632 11,483 11,630 Sow Beginning Stocks 1,483 1,483 1,371 1,371 1,371 1,275 1,270 1,313 Production (Pig Crop) 31,068 31,085 28,850 29,400 29,151 26,850 28,000 28,000 Total Imports 2 2 2 2 3 2 2 2 Total Supply 44,880 44,897 41,032 41,583 41,334 37,484 39,485 39,632 Total Exports 9,357 9,357 6,475 6,200 6,376 5,600 6,200 6,000 Sow Slaughter 0 0 0 0 0 0 0 0 Other Slaughter 21,693 21,693 22,325 22,400 21,848 20,500 21,700 21,200 Total Slaughter 21,693 21,693 22,325 22,400 21,848 20,500 21,700 21,200 Loss 1,650 1,667 1,600 1,500 1,480 1,500 1,500 1,500 Ending Inventories 12,180 12,180 10,632 11,483 11,630 9,884 10,085 10,932 Total Distribution 44,880 44,897 41,032 41,583 41,334 37,484 39,485 39,632 All data in 1,000 head 2008 2009 2010 CANADA Market Year Begin: Market Year Begin: Market Year Jan 2008 Jan 2009 Begin: Jan 2010 USDA New USDA New USDA Me d Post O New ld Post at, Swine Official Post O Olfficial D D Post Official ata D Post ata ata Data Data Data Data Data Slaughter (Reference) 21,693 21,693 22,325 22,400 21,848 20,500 21,700 21,200 Beginning Stocks 56 56 60 55 60 55 55 67 Production 1,786 1,786 1,790 1,990 1,790 1,660 1,950 1,740 23 Total Imports 194 195 170 170 180 200 200 210 Total Supply 2,036 2,037 2,020 2,215 2,030 1,915 2,205 2,017 Total Exports 1,129 1,129 1,130 1,130 1,123 1,100 1,125 1,130 Human Dom. Consumption 847 848 835 830 840 765 840 845 Other Use, Losses 0 0 0 200 0 0 190 0 Total Dom. Consumption 847 848 835 1,030 840 765 1,030 845 Ending Stocks 60 60 55 55 67 50 50 42 Total Distribution 2,036 2,037 2,020 2,215 2,030 1,915 2,205 2,017 All data in 1,000 head (slaughter) or 1,000 metric tons carcass weight equivalent (all others) 24
Posted: 08 March 2010

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