Manitoba pork producers are civilian casualties in the latest tit-for-tat sanctions battle between the Russian and Canadian governments.
Russian officials announced yesterday that the country will no longer import many agricultural food products from the West, including Canada and the United States.
“We’re extremely disappointed to see Russia add sanctions to agricultural products,” Manitoba Pork Council chairman Karl Kynoch said. “The hog industry is getting caught up in politics again. We’re the ones that are suffering due to the political games played around the world.”
The ban includes frozen pork, ham, pig fat and offal, which accounted for 86 per cent of the total $563 million in agri-foods exported to Russia in 2012, according to Statistics Canada.
“For the hog industry, Russia is a very important market for us to lose,” Kynoch said. “Russia is the fourth largest importer of hogs out of Canada.”
Russia only trails the U.S., Japan and China for importing Canadian pork.
While Canadian producers already ship to more than 80 countries globally, the key will be finding a home for the specific product that was being sent to Russia —and quickly.
“The concern for producers is that needs to happen fast because if shipments were to back up, then it ends up in lower returns to the producers,” Kynoch said.
“Generally you’re only shipping certain cuts into these markets, so that creates more of a challenge because you’re not finding a market for the whole pig, but for the cuts that Russia used to buy.”
Neepawa’s HyLife Foods senior vice-president and general manager Guy Baudry said the industry has always understood there is some uncertainty with the Russian market and the sanctions will force packers to diversify.
“The Russian market was a very complementary market for Canada,” Baudry said. “They took a lot of ham and shoulders, which are more difficult to market in North America, and, in addition, they would take trim and back fat, which are products that we have surplus in Canada and depend on an export market for.”
The ban is going to hurt producers in Manitoba, where 85 per cent of pork is exported outside the province within Canada or around the world.
“Fortunately the North American marketplace has been characterized as stronger this year because of the (porcine epidemic diarrhea) virus, which has impacted hog supplies,” Baudry said.
“This will impact the whole Canadian export industry because the U.S. is banned as well, so, overall, there will be more meat products available in the North American marketplace, which, in turn, is likely going to depress prices.”
It comes at a bad time, too, according to Kynoch, as prices had finally gone up to the point where producers could rebound after years of bad returns.
“We’re seeing some of the best profits we’ve ever seen in the hog industry this year and after five years of losses, it’s going to take more of that to rebuild the equity, get the loans paid off and put some capital back into the operation,” Kynoch said.
But it’s not only going to hurt Manitoba producers, it’s also going to impact Russians, who will almost certainly have to pay more for products that Canada used to provide.
“Why would Russia sanction their own people?” Kynoch said. “It’s going to have some hurt for their own people having less access to product, which could definitely increase their prices.”
» Twitter: @CharlesTweed