The Manitoba Pork Council is predicting that the American COOL food labeling law could reduce its weanling pig exports to the U.S. by 50 percent - a business once valued at $150 million annually. Before the law took effect, Manitoba producers shipped about 4.2 million weanlings per year to the U.S.
"It's just uncertain right now what is going to happen," says Andrew Dickson, the group's general manager. American buyers have severely cut back purchases after U.S country of origin labeling laws took effect September 30th.
Due to the new COOL labeling rules, Hormel Foods and John Morrell Company have indicated they will no longer accept Canadian-origin hogs. "We're going to be lucky if we can hold on to half the weanling market," says Dickson.
As a result of the uncertainty surrounding U.S. acceptance of Canadian-origin pigs, Manitoba has begun decreasing its pig breeding herd, which totaled 347,000 animals on Oct. 1. "We probably have about 150,000 to 170,000 sows dedicated to supplying weanlings into the United States,” says Dickson. “If we held on to half of those sows to produce weanlings, there's still a large number that are going to be liquidated.”
Manitoba pork producers have culled 22,000 head of breeding stock receiving $225 per sow through a Canadian government initiative to reduce the Canadian pig herd.
U.S. COOL laws have also slowed has the export of market-weight hogs to a trickle. Manitoba once shipped 1.2 million of these pigs annually. Many of those pigs are now being slaughtered in Manitoba.
Canadian hog producers have suffered severe losses in the last year due to overproduction, high feed costs, U.S. non-tariff trade barriers and a high-valued loonie. John Preun, chairman of the Manitoba Pork Marketing Co-op, said falling feed grain prices, strong offshore demand and a devalued loonie have brought returns on market hogs to near break-even levels for the most efficient producers.
Preun said he sees hope for Manitoba pork producers to return to profitability by mid-2009. "At this point, there's a light at the end of the tunnel, we just hope it's not another train coming at us," he said.