Canadian subsidy would hurt U.S. pork producers

by Editor
Wednesday, July 22, 2009

An emergency government subsidy program for the Canadian pork industry proposed by the Canadian Pork Council would have a “lethal impact” on U.S. pork producers, according to the National Pork Producers Council.

The CPC has asked the Canadian government to pump $800 million into the country’s pork industry. The key component of the programme is a loan to pork producers – to be repaid over 10-15 years – of $30 for each market hog. A second component would provide $500 for each sow culled plus the market value of the animal.

The proposal would artificially prop up Canadian pork production and, according to Iowa State University economist Dermot Hayes, U.S. live hog prices would be approximately 7% lower than otherwise would have been the case.

Such a subsidy programme would had a lethal impact on U.S. pork producers, said NPPC President Don Butler. NPPC is extremely concerned about such a programme, which will shift financial pain to U.S. producers, who already have lost an average of more than $21 per hog since October 2007, he continued.

Butler pointed out that while the programme is described as a “loan,” it is unlikely that commercial banks would make unsecured, subordinate loans to Canadian pork producers at a time when they are losing money.