Tuesday, August 11, 2009

Canadian Government Must Not Delay Help for Hog Farmers

The American government seems poised to offer help to the hog industry in the form of loans, government purchases of pork, and help accessing markets:

US Agriculture Secretary Tom Vilsack has announced that USDA is undertaking an unprecedented effort to use the department's administrative flexibility to provide relief to individuals and businesses in struggling agriculture industries.

Vilsack has ordered USDA Rural Development and the Farm Service Agency to use all available means to help producers, processors and other small businesses who have been hit by worsening economic conditions.

"The Obama Administration is committed to doing everything it can to help families and businesses in agriculture to get through these tough economic times," said
Vilsack. "Not only is this effort critical to restoring economic prosperity in America's rural communities, it is essential to ensure that Americans continue to have access to a safe, secure, and healthy food supply."

And in addition to the loans:
The governors of nine key pork-producing states sent President Obama a letter Friday urging him to rescue an industry that's been battered by high commodity prices and worries about disease. "Today, the pork industry is facing an economic crisis that is catastrophic in nature," the governors said in the letter. They urged Obama to purchase an additional $50 million in pork for government nutrition programs, eliminate a ceiling on how much surplus product the Agriculture Department can buy and push to expand export markets, primarily to China.
Pretty reasonable really, nothing on the scale of the bank and auto bailouts. So why the vicious attack on Canadian hog farmers for doing the same thing? The Financial Post reported Friday:

Aid for Canadian hogs will read as an attack on farmers in the United States, Canada’s largest market, where producers say they’ll do what they can to stop the proposal.

“Essentially, what this does is it transfers suffering among pork producers from north of the border to south of the border, and we’re not going to stand by and let that happen,” said Nick Giordano, vice-president of the U.S. National Pork Producers Council. “We’re not going to want to wait. We’re going to scream bloody murder. We’re going to go political.”

What he means is a trade action, the kind that cost Ontario hog producers $5 million to defend less than 5 years ago. It's an empty threat. In order for the Americans to defend a duty they need to show injury and typically that involves increased shipments into the US market. However, the Canadian hog industry has shrunk dramatically in response to low prices, high feed costs, unfavourable exchange rates, and trade challenges like Country of Origin Labelling and the H1N1 impact on export markets. The Canadian Pork Council has put forward a very mild ask of the Canadian government for loans to help farmers restructure their operations and a program to help others exit the industry. The American industry looks like it will receive the same kind of help, there's no time for delay.

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