U.S. hog farmers warn Ottawa against “bailout”

The main hog farmers’ group in the U.S. will keep “all options open” if Ottawa gives Canadian hog producers a “cash bailout” that the group says would depress U.S. prices.

The National Pork Producers Council (NPPC) on Monday reviewed the Canadian Pork Council’s July 6 “Strategic Transition Plan” proposal to Canada’s federal government, and the NPPC warned such a proposal would have a “lethal impact” on U.S. hog producers.

“The key component of the (CPC’s proposed) program is a loan to pork producers — to be repaid over 10-15 years — of $30 for each market hog,” the Washington, D.C.-based council said in a release Monday. “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,” the NPPC said.

The U.S. council also quoted Iowa State University economist Dermot Hayes as saying U.S. live hog prices, given such a program in place in Canada, would end up about seven per cent lower than otherwise would have been the case.

“Such a subsidy program would have a lethal impact on U.S. pork producers,” said NPPC president Don Butler, a producer from Clinton, N.C., about 110 km south of Raleigh.

“NPPC is extremely concerned about such a program, which will shift financial pain to U.S. producers, who already have lost an average of more than US$21 per hog since October 2007.”

The CPC’s proposed program describes the aid as a “loan,” Butler said, but added the council finds it unlikely that banks would make unsecured, subordinate loans to Canadian hog producers at a time when they’re losing money.

“The program is really a cash bailout,” he said in the NPPC’s release.

Canada’s Agriculture Minister Gerry Ritz was quoted, not long after the CPC released its proposal, as saying officials from the federal ag ministry and the CPC have been working to see how the proposed transition plan could be prompted forward and what it could cost governments to put it in place.

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