The continued expansion of the Canadian pork industry could put severe
downward pressure on hog prices in the fourth quarter of this year, National Pork Producers Council (NPPC) President Dave Roper warned during a recent meeting between U.S., Mexican and Canadian pork producers. Roper insisted that Canadian producers act responsibly to ensure that U.S. slaughter capacity is not overwhelmed in the fourth quarter of this year by Canadian hogs.

“While U.S. production has grown very little since 1998, hog production in Canada has increased by more than 20 percent,” Roper said. “This increased Canadian hog production is displacing U.S. pork sales in Canada, the United States and third country markets. Further, it is resulting in higher levels of live hog exports to the United States. This year, 5.8 million Canadian hogs are expected to cross the border this year, up from 5.3 million in 2001.”

Canadian producers disagreed with the assertions of Roper and other U.S. producers that Canadian subsidies are fueling the hog expansion in Canada. However, the Canadian producers did concede that hog imports from Canada had the potential to overwhelm U.S. slaughter capacity in the fourth quarter of this year and collapse the hog market.

Consequently, Canadian producers agreed to work closely with U.S. producers and the governments of Canada and the U.S. to develop a plan to manage fourth quarter live hog exports to the U.S. to avoid a bottleneck at U.S. slaughter plants. While Canadian slaughter has been growing in recent years, significant unused capacity still exists in Canada. Given that Canadian live hog prices track U.S. live hog prices, Roper said it is to the advantage of producers in both countries to work together to avoid a repeat of the 1998 price collapse.

Last week, in response to a sudden drop in live hog prices, NPPC asked senior USDA officials to use all existing programs and authorities to the fullest extent possible to purchase pork and pork products. In addition, the NPPC Board of Directors established an ad hoc task force, comprised of all sectors of the industry, to explore long-term initiatives to strengthen the industry’s financial position.

National Pork Producers Council