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Canada Livestock and Products Annual 2006

by 5m Editor
17 September 2006, at 12:00am

By USDA, Foreign Agricultural Service - This article provides the pork industry data from the USDA FAS Livestock and Products Annual 2006 report for Canada. A link to the full report is also provided. The full report includes all the tabular data which we have omitted from this article.

Report Highlights

This report reviews developments in the Canadian cattle and pork sectors that will influence the production and trade of live animals, beef and pork through 2007.

Executive Summary

After Mexico and Japan, Canada is the third most important export market for U.S. exports of fresh and frozen red meats. In 2005, U.S. fresh and frozen red meat exports to Canada reached a record $456 million and accounted for more than 12% of the U.S. total in the category. For 2006, the value of U.S. fresh and frozen red meat exports to Canada is forecast to exceed $630 million reflecting increased exports of both beef and pork.

Canadian pork production during 2006 is expected to slip to about 1,885 thousand metric tons, 1.5% below the level of a year ago. A decline in Canada’s hog inventory and significant hog production losses in Ontario and Quebec because of porcine circovirus are major reasons for reduced pork production. Prospects for increased U.S. pork output in 2007 will put downward pressure on Canadian hog market prices and lead to an additional production decline for Canadian pork next year.

For 2006, Canadian pork exports are forecast to increase about 1.6% to 1.1 million metric tons. During the first half of 2006, weaker exports to the United States and Japan, down 3% and 14% respectively year over year, were more than offset by Canadian pork export increases to Russia, Romania, and South Korea.

For 2006, Canadian pork imports from the U.S. are on pace to exceed 100,000 MT for the second consecutive year, a development not seen in U.S./Canada pork trade since the late 1970s. U.S. pork captured 97% of the Canadian import market for pork last year.

Pork Production

The post estimate for Canadian pork production in 2006 is 1,885 thousand metric tons, a modest 1.5% decline from the 1,914 thousand metric tons produced last year. The estimate reflects a decline in Canada’s hog inventory, hog disease losses in Ontario and Quebec (i.e, porcine circovirus;see CA6013), and increased pork production in the United States, the largest export market for Canadian pork processors. Prospects for another increase in U.S. pork output in 2007 and a flat hog inventory in Canada point to an additional small production decline for Canadian pork output next year.

Consumption: Prices

Prices in the first six months of 2006 were about 19% below the comparable period in 2005. Canadian hog market prices are expected to remain under pressure during the last half of 2006 into 2007 reflecting a forecast of rising pork production in the United States; Canada’s largest export market for pork and live swine.

Growth in Hog Numbers Slows

Canada’s hog inventory fell for the second consecutive quarter when hog producers reported 14.5 million hogs as of July 1, 2006. This was 3.1% below the same date last year, and reflected, in part, weak hog market prices since the fall of 2005. At mid-year, hog inventories in Eastern Canada fell 5.1%, substantially more than the rate of decline of 0.4% in the West. According to Statistics Canada, hog production in Quebec and Ontario has been more adversely affected by disease than in normal years.

This is evidenced in record level death losses. Producers have been contending with a new strain of porcine circovirus along with other diseases, sometimes made worse by this virulent disease. Exports of Canadian hogs, principally to the United States to be fed, were up 9.6% in the first half of 2006 from the same period the previous year. They were at historically strong levels.

Per Capita

With the exception of turkey meat, which remained flat, pork is the only meat in the five years ending 2001 that registered a decline in per capita consumption. Canadian per capita pork consumption peaked in 1999 at 30.09 kilograms but slipped more than 23% to 22.93 kilogram during 2005. Strong price competition from other meats at the grocery retail level and an increase in foodservice meals, where there are fewer pork menu offerings compared to beef and chicken, are two important factors for the trend to lower Canadian pork consumption.

Pork Trade: Exports

For 2006, Canadian pork exports are forecast to increase about 1.6% to 1.1 million metric tons. During the first half of 2006, weaker exports to the United States and Japan, down 3% and 14% respectively year over year, were more than offset by Canadian pork export increases to Russia, Romania, and South Korea. A modest increase to about 1,120 thousand metric tons, an 1.8% increase, is anticipated for Canada’s pork exports during 2007 when exports to the United States will again be under pressure reflecting the estimated 3% rise in U.S. pork output.

Imports

For 2006, Canadian pork imports from the U.S. are on pace to exceed 100,000 MT for the second consecutive year, a development not seen in U.S./Canada pork trade since the late 1970s. Lower Canadian pork output and increased Canadian pork exports to South Korea, Eastern Europe and Australia have created additional demand for U.S. pork in the Canadian market particularly in Ontario, the destination for almost 70% of U.S. pork exports to Canada. U.S. pork had 97% of the market share for the Canadian pork import market in the first half of 2006.

Industry Developments: Ontario Pork Board To Study Open Marketing System

Currently, Ontario farm product marketing legislation provides regulations for the establishment and powers of Ontario Pork, the provincial hog marketing board. The regulations stipulate that all of the province’s slaughter hogs be through the central selling desk of Ontario Pork and all producer returns pooled. In recent years, some producers have been lobbying for a more open marketing system, speculating that they could increase individual returns. Support for a more open system has grown and in response, Ontario Pork has announced that it will provide consultation on the issue to get input from producers and other industry stakeholders. No timetable has been announced.

Carbadox

In February 2001, responding to the European Union audit in the fall of 2000 of the Canadian Program for the Control of Residues, Canada made a public commitment to reassess the use of Carbadox in pigs. By April 2001, the Canadian Pork Council had advised producers to cease using Carbadox (trade name Mecadox ®) until Health Canada completed a review of the availability of this veterinary drug. On Aug 10, 2001 Health Canada (HC) issued an order to stop the sale of Carbadox. Since that time, HC has announced its intention to add carbadox to Canada’s list of banned substances under Canada’s Food and Drugs Act.

Carbadox is an approved veterinary drug in the United States with a recommended withdrawal period to eliminate residues from pork meat. To date, Japan, Australia and the European Union have banned the use of carbadox, but accept imports from countries that use the antibiotic under their residue monitoring and control measure regulations. HC is currently considering a regulatory proposal that is much stricter than that used by Japan, Australia and the EU –one that also would reportedly require certification that imported pork has no carbadox treatment history. The Canadian Pork Council, the Nartional Pork Producer’s Council, the drug manufacturer and the U.S. government are all urging HC to adopt a less aggressive approach to eliminate possible carbadox residues from the Canadian Food Inspection Agency supply.

Further Information

To read the full report please click here (PDF format)

List of Articles in this series

To view our complete list of 2006 Livestock and Products Annual reports, please click here

September 2006