Markets

Genesus Global Market Report: Canada, January 2024

25 January 2024

4 minute read

By: Spencer Long

North America

After a disastrous 2023 financially, Canadian producers are looking for a better 2024. The USDA projects that Canada’s pork production will decline a further -1.2% in 2024 and Farm Credit Canada anticipates producers are going to face tight margins until at least the summer. In the last couple of weeks financial projections for 2024 have changed rather dramatically (see charts below). These charts are projections for producers in Ontario for 2024. The first chart came out on January 3, 2024, and the second chart came out on January 10, 2024. As you can see for the calendar year 12 month average the projection went from a loss of $16.23 to $1.48 loss in the span of one week of projections. That dramatic change is positive news for a wounded industry and will hopefully continue in the direction where most of the 2024 calendar year will be profitable.

California’s Proposition 12 officially became law at the beginning of January which impacts Canadian pork exports to the state. Since being upheld by the U.S. Supreme Court in May 2023, Canadian producers had been stuck in limbo waiting for what it would all mean for exports. The reality for Canadian producers is that this law restricting sales of pork in California is not allowed under existing trade regulations. The US-Mexico-Canada Agreement (USMCA) does not permit the creation of ‘non-trade tariff’ trade barriers such as those that exist in Prop 12. Whether or not the Canadian government raises these facts clearly and strongly with the state of California and also the U.S. government remains to be seen, wouldn’t hold my breath, this government hates Canada’s agricultural industry. Impeding international trade agreements illegally by the state of California should not be allowed under any circumstances. If a state can just arbitrarily decide they won’t respect current international trade agreements than the whole USMCA could fall apart. California should focus more on ensuring homelessness becomes under control with the fact a third of all homeless people in the U.S. live in California rather than virtue signalling and pandering to their base of elite urban liberal voters who have never been to a farm and enjoy paying $15 for avocado toast.

Pork demand has laggard behind for decades now. This is something we all see when looking at charts of meat consumption by type. Chicken has exploded and pork has been flatline. Of course, the industry attempted to make pork more like chicken which resulted in most pork today having no taste and providing a poor eating experience, pork consumption also didn’t increase over that time, so it was mission accomplished for the industry in driving people away from pork. We see the lack of demand for pork when you go to a grocery store and just look at prices of pork vs. beef where consumers are choosing with their money to buy beef at a higher price. The below picture shows whole pork shoulders for $1.69 lb. ($1.25 USD lb.) at a grocery store in Canada. Pork shoulder is a cut that should have more marbling and flavor as a fattier cut of the hog and as such provide a better eating experience compared to other cuts. Just for context ground beef at this same grocery store is $7.99 lb. ($5.90 USD lb.). Ground beef which is not a premium cut of beef is over 4.5 times higher in price than pork shoulder. That is a dismal reflection of our industry when a pork cut that should provide consumers with a better tasting experience is priced well below a non-premium cut of beef. We chased chicken, raced to the bottom and now as an industry we reap what we sowed. Pork consumption is flatlined, prices are significantly lower than beef and as an industry we continue to languish. It's time for change. Providing consumers with all cuts of better tasting pork at a competitive cost of production is one way we believe we can drive real demand and stop continuing this destructive path of losses we constantly see. We made pork more like chicken and we see the consequences of it. It's time for our industry to change course and begin a better path for us all.