Market stayed strong in '98
Preliminary data show international pork trade weathered stormy timesBY ROBERT IRWIN
Despite three major pork packer-processor strikes, shattered economies in major markets and - unlike major competitors - operating without export subsidies, Canadian pork exports actually increased eight per cent last year, according to preliminary reports from the Canadian Meat Council.Sales to 55 countries totaled about $1.1 billion, or approximately one-third of the hogs produced in this country. Canada's export sales are surpassed only by the European Union and the United States.
The country's enviable swine health status provides a competitive edge. The prevalence of such diseases as foot and mouth in some other large pork producing nations sidelines any export initiatives. Nevertheless, Canada's pork export players have an array of health hoops to jump through.
"Just because we have an excellent health status doesn't mean it opens all the doors," explains Jacques Pomerleau, executive director, Canada Pork International (CPI), the export promotion agency for Canada's pork industry. Founded in 1991, CPI membership includes packers, processors, provincial marketing boards, federal and provincial governments, and related businesses. Normally, chilled or frozen pork is offered in truck or container lots, weighing approximately 18 tonnes.
Pomerleau concedes some countries have "legitimate health concerns," but notes many, under rising pressure from their own pork producers, use health as a non-tariff trade barrier.
Australia only admits frozen Canadian pork, which must be deboned, heat treated on arrival and kept in separate facilities from domestic product. Permits are required to move the imported meat from storage to processing; packaging must be incinerated.
The official reason is Porcine Reproductive and Respiratory Syndrome (PRRS), a disease found in most countries, including Canada, though Pomerleau says, "We have studies that show the virus cannot be transmitted in frozen meat."
The Aussie obstacles are costly and have the desired effect of dampening enthusiasm for imported pork among that country's processors and retailers. Argentina enforces similar standards.
Mexico's heavy metal testing program has been temporarily shut down following protests from Canada and the U.S. after unreliable findings interfered with a number of pork shipments. Preliminary figures show Mexico was Canada's third-largest market in 1998.
That spot on the export chain was previously claimed by Russia - pre ruble collapse. Access to the market is troublesome because Russian law stipulates individual carcasses have to be tested for trichinosis, a task that only two Canadian plants are equipped to carry out. "You need a lab, so it's very costly," Pomerleau explains.
The lab requires certification by the Canadian Food Inspection Agency, which sets standards for design and staff training. Is it worth the trouble and expense? "Those plants thought it would be, but they haven't shipped much," Pomerleau observes.
Before the ruble collapsed, Canadian pork shipments to Russia totaled more than 500,000 tonnes annually. Final 1998 numbers aren't yet available, but volume was down.
Last year, Japan purchased 68,190 tonnes, up from 67,197 tonnes a year earlier. Japan won't accept Codex, the international standard for meat residues, preferring its own standard, which omits approval of a number of commonly used medications.
Some tetracyclines aren't named, so Japanese tolerance for them is zero. "It's not a problem, but when you ship to those countries you have to be mindful of those things," Pomerleau warns.
The U.S. continues as Canada's largest export market, aided by common acceptance of inspection standards. Last year, Canada sent 175,050 tonnes of fresh and processed pork stateside. That was 46 per cent of Canadian pork exports. Ten years ago, before efforts were made to diversify markets, 90 per cent of Canadian exports went to the U.S.
Countries that are signatories to the World Trade Organization are obligated to trade. However, they are permitted to protect their own human and animal health.
Pomerleau constantly seeks new markets. Once he decides one is worth pursuing, he begins the process, as he did recently with India, by sending a letter asking for health requirements.
The Canadian government officially intervenes when a country ignores the letter, as India seems to be doing. If that approach fails, Canada can demand a WTO hearing, which could lead to sanctions against the reluctant trader.
For Pomerleau the situation is clear. "India doesn't import, because India doesn't want to import," he concludes.
Pomerleau acknowledges that much of India's population doesn't eat pork for religious reasons; others are too poor to afford it. That still leaves millions of potential consumers and a market for hundreds and perhaps thousands of tonnes of Canadian pork, he reasons.
Canada may soon penetrate the elusive and potentially vast
European
market. Europe has insisted on standards that have been too
costly for
existing plants to implement. They're not "better than our
standards,"
Pomerleau emphasizes. "They are different." He notes the new
Maple Leaf
plant at Brandon is one of several being set up to meet European
requirements.
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Custom spreader fined for polluting pond
BY ROBERT IRWIN
Zurich pork producer Peter Jacobs paid a $2,000 fine last month after pleading guilty in Ontario provincial court to spilling manure on a neighbouring pig farm.Last Easter weekend, Jacobs - an 80-sow farrow-to-finish operator - had been custom-applying manure with a flat-hose, side-reel irrigation system for Lionel Wilder, a neighbouring hog finisher.
Ministry of the Environment (MOE) investigator Gord Robertson says apparently no one reacted when a disconnected pipe began discharging manure near a covered municipal drain. Manure from Wilder's 80,000-gallon holding tank made its way through a large drainage tile and emerged more than a mile away in a pond, which was the centrepiece of a 40-acre campground owned by Bill Kerr.
Kerr lost his newly stocked trout. He says the incident and subsequent cleanup also put a damper on his May 24 grand opening.
Although Jacobs initially denied any connection with the spill, MOE charged him under the Ontario Water Resources Act. Robertson notes the maximum $10,000 fine for an individual with no previous convictions can be awarded in cases where damage is greater.
Kerr says he "was kind of disappointed" with the fine, and considered launching a civil suit. However, he explains he was advised by a lawyer that it would be difficult to prove his losses.
According to Robertson, Wilder wasn't charged because he had delegated the spreading to Jacobs. Following the incident Kerr had publicly expressed his appreciation for Wilder's prompt apology.
"That meant a lot," Kerr said. Wilder's insurance covered some
damage, but
Kerr is nonetheless out of pocket on some of the cleanup costs.
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Opposing views from packers, producers
BY ROBERT IRWIN
If they "don't communicate and work more closely with our hog producers, Canadian packers will soon depend on American hogs," warns outgoing Canadian Meat Council (CMC) chairman Bill Mulock. At the recent CMC annual meeting in Ottawa, Mulock urged his members, who account for 94 per cent of federally inspected hog slaughter, to look to Quebec, which he described as the only place in North America that "achieved a balance in hog production and plant utilization" when prices crashed.In an earlier interview, Don Davidson, senior vice-president and general manager, Maple Leaf Pork, told Farm & Country that Quebec's pork industry alliance owes its survival to provincial government stabilization money. Davidson insisted money from Quebec's ASRA program keeps producers happy, allowing packers there to pay less for hogs.
"That's nonsense," responded Edouard Asnong, chairman of the Canadian Pork Council. "ASRA is more of a handicap; if producers are doing well they have less incentive to work together," reasoned Asnong, who finishes hogs on a farm located about an hour east of Montreal.
Obviously annoyed by Davidson's characterization, Asnong said he is baffled by the alleged link between stabilization money and Quebec's nearly 10-year-old alliance, which, he notes, involves about 30 parties, including producers, processors, unions and universities.
"He should learn some French and read some French literature," Asnong said in disgust on hearing Davidson's views.
Mulock predicted American hogs will dominate within 10 years if the Canadian industry doesn't get its act together. He said CMC members have been supportive of his view, which, he observes "took everybody to task for the relationship, which hasn't worked very well.
"I was pleasantly surprised," confided Mulock, noting he "spent the better part of a month" preparing his remarks. He emphasized he doesn't want to speak for the CMC now that his term is over, but said he thinks the answer to strengthening the Canadian industry lies in getting producers and packers in a room "and together talk about the next five years."
Once they agree on world market demand, Mulock suggests producers and packers should "come up with a plan whereby in return for a guaranteed supply of hogs you get guaranteed slaughter capacity. The answer is so simple, [but] I just don't know how to get there."
Mulock, president of Toronto-based Tasty Chip, a private-label peameal bacon processor, said the producer-processor power struggle has dragged on for 35 years: "Hog producers insist they have the right to sell their hogs wherever they want, at whatever price they want. Packers, on the other hand, insist on the right to buy hogs wherever they want at whatever price, and the two of them just can't mix."
An ongoing federal pork industry roundtable has been dealing with producer-packer issues for almost two years. CMC general manager Robert Weaver said the roundtable was requested by packers concerned about producers sending some three million live hogs annually to the U.S.
The exodus, he said, was affecting packer profitability, because plants weren't operating at capacity. Did the roundtable achieved anything?
"I don't think so," Weaver concluded. "Now we're up to four million."
He noted that hog slaughter in federally inspected plants rose dramatically from 197,000 a week in December 1997, to 348,000 a week in December 1998. Nevertheless, he said two plants in Western Canada and one in Quebec were looking for pigs during the recent strike at Toronto's Quality Meat Packers Ltd.
"Now Quality is slaughtering 26,000 hogs a week. Most of the plants across the country have expanded in one way or another in the past year, and we have Maple Leaf in Brandon coming on next summer."
Asnong said the national roundtable was worthwhile but suggested many producer-packer issues need to be resolved provincially.
Some Ontario producers have called for a Quebec-style
producer-packer
alliance. Ontario Pork has been meeting with packers and other
industry
participants as part of an initiative dubbed the Ontario
Alliance.
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AGRI-BUSINESS
Nuts & bolts
Producers vs. ADM
Illinois-based feed company Archer Daniels Midland has paid its debt to the Canadian taxpayer for fixing prices for the feed additive lysine, but now one group directly harmed wants reparation: 8,000 Ontario pork producers. Feb. 11, Ekfrid township, Middlesex county, pig breeder Rein Minnema filed a C$35-million class action suit against ADM, Japan-based Ajinomoto Company, and U.S.-based Sewon America, three lysine suppliers who pled guilty to price fixing in Canada last year. The lawsuit filed by Barrie law firm Oatley, Purser says that once ADM dominated the Ontario lysine market, the price of lysine increased from 60 cents U.S. a pound to $1.20 between 1992 and 1994, causing producers to pay "more for lysine...than they would have paid in a competitive marketplace." ADM received a C$16-million rap on the knuckles last May in Canadian federal court.
Tyson tumbles
Russian and Asian flus made for an unhealthy drop in profits at Arkansas-based world chicken leader Tyson Foods. Year-end earnings were US$25 million, down 85 per cent from the previous year's US$186 million. Sales, however, rose US$1 billion to US$7.4 billion, according to Feedstuffs. At Tyson's recent annual meeting, chairman John Tyson and CEO Wayne Britt said the company aims "to be the undisputed world leader" in all aspects of the chicken business. It currently owns a 27-per cent marketshare in the U.S.
Seed money
The provincial government's tree-seedling facilities in St.
Williams are
now in private hands. AquaNorth Forest Industries completed the
purchase
Sept. 1998 and plans a $10-million capital expansion on the site.
Planned
facilities include a tree nursery focused on containerized
seedling
production. Much of material handling and growth management will
be handled
by computer-controlled systems and robotics, according to
vice-president
marketing David Godsoe. He says AquaNorth has also developed a
patented
container system that helps prevent root deformities in seedlings
after planting.
Internet order-taking: www.forestcare.com
or call (416) 777-0530
Aggie aid
Getting an education isn't cheap these days, but help's on the way for farm kids heading off to school in September. In 1997, the Ontario Federation of Agriculture contributed $30,000 to help needy students at the University of Guelph's Ontario Agricultural College. The OFA recently presented eight more $500 scholarships. Qualifying students must be enrolled in B.Sc (Agr.), B. Comm, or B.Sc (Env.) degree programs, with preference to students from farm families who have participated in rural community groups such as 4-H. Each student qualifies for a maximum $1,500.
Tractor trough
The last of the Big Four tractor companies has weighed in with year-end results, and the message is the same: lower commodity prices, lower tractor sales. Like its rivals in other colours, Amsterdam-based New Holland reports lower profits and slashed production. The company sold 80,800 tractors last year, down 13 per cent. Pre-tax profit for the year was US$453 million, down almost US$200 million. The company lost US$14 million in its fourth quarter, prompting a 22-per cent reduction in tractor production, and a 1,300 reduction in workforce. Chief Marketing Officer Tom Kennedy forecasts a 15-per cent decline in tractor sales in 1999, due to continued weak commodity prices. NH's 1998 combine sales (5,900) and forage equipment sales were flat; backhoe and skid steer sales rose 13 per cent to 20,700.
Safety survey
One in three farmers don't have a first aid kit, according to a farm safety survey conducted by the Ontario Federation of Agriculture at the January farm show in Toronto. The survey of 260 people, however, found strong support for a personal health and safety audit on the farm. Ninety per cent said they already practise hazard prevention on the farm, but more than half did not do safety training for family or employees. The survey was in conjunction with the new Agricultural Safety Audit Program.
Genetics to go
Corporate battles these days are more likely to rage underneath
the
microscope than in the boardroom. In the latest of a series of
genetic
skirmishes between agri-business giants, Des Moines, Iowa-based
seed
company Pioneer Hi-Bred has filed lawsuits in the U.S. alleging
"misappropriation" of Pioneer genetics, citing evidence from
genetic
fingerprinting. Early February, according to the Globe and Mail,
Cargill
admitted that one of its corn hybrids sold in the U.S. contains
Pioneer
genetic material. The implications stretch beyond Cargill, which
had
initially hotly denied the allegations, to Monsanto, which may
now possess
"hot" genetics after purchasing some of Cargill's overseas seed
business.
The news also prompted German chemical giant AgrEvo to withdraw
its offer
to buy Cargill's North American seed business for US$550 million.
Cargill
recently reported first-half net earnings at US$587 million, up
five-fold,
according to Feedstuffs.
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