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Canadian Pork ‘Bail Out’ Would Hurt US Producers

by 5m Editor
21 July 2009, at 11:31am

US - An emergency government subsidy program for the Canadian pork industry proposed by the Canadian Pork Council would have a "lethal impact" on US pork producers, according to the National Pork Producers Council.

The CPC has asked the Canadian government to pump $800 million into the country’s pork industry. The key component of the program is a loan to pork producers – to be repaid over 10-15 years – of $30 for each market hog. A second component would provide $500 for each sow culled plus the market value of the animal.

The proposal would artificially prop up Canadian pork production and, according to Iowa State University economist Dermot Hayes, US live hog prices would be approximately 7 per cent lower than otherwise would have been the case.

"Such a subsidy program would have a lethal impact on US pork producers," said NPPC President Don Butler. "NPPC is extremely concerned about such a program, which will shift financial pain to US producers, who already have lost an average of more than $21 per hog since October 2007."

Mr Butler pointed out that while the program is described as a "loan," it is unlikely that commercial banks would make unsecured, subordinate loans to Canadian pork producers at a time when they are losing money. "The program is really a cash bailout," he said.

"NPPC is keeping all options open to address this issue," said Mr Butler.