Jerry Bouma, management consultant in Edmonton and lead architect of the Alberta Pork Revitalization Strategy.
If the Canadian pork industry wants to know where the U.S. pork industry is going it just needs to watch the U.S. dollar and the energy market, says a leading pork industry economist.
Although the U.S. pork industry is in a precarious position, says Dermot Hayes, a Professor of Economics and Finance with Iowa State University, from a trade perspective, a weakened dollar will help offset the problem. “My sense is the U.S. dollar will continue to fall even once we are out of the current economic crisis because the U.S. still has a balance of trade problem,” he says. “This should continue to give a small competitive advantage to the U.S. pork industry.”
Despite setbacks, the ethanol market will continue to be a decisive factor in the price of feed grains for both the Canadian and U.S. pork industries, says Hayes with the Obama Administration in support of the ethanol industry as part of its pursuit of energy independence. Also, despite some industry failures, Hayes says that existing ethanol production capacity will be used to produce ethanol which will drive feed grain costs in the process.
The ability of the U.S. to continue to sell pork to China, a market that has opened up in recent months due largely to natural disaster, disease and pre-Olympic scarcity, will be dependent on whether or not the Chinese Government will allow market forces to operate, says Hayes. “As labor shortages emerge in China, fewer farm families will want to produce backyard pigs, a sector that currently produces about half of all the pork produced in China,” he says.
“If China responds to this problem and allows a continuation of imports, U.S. pork producers might ‘dodge the bullet’ and export their way out of the increased production problem. However, if China decides to restrict pork imports despite these economic forces, the U.S. pork industry will need to cut its sow numbers by about 3%.”
Meanwhile, the Canadian pork industry will need to ’put skin in the game’ and set-up more integrated systems to produce, process and market pork if it is to compete with the U.S. and other pork industries, says Jerry Bouma with Toma & Bouma Management Consultants in Edmonton and Lead Architect of the Alberta Pork Revitalization Strategy.
With consumer concern of how food is produced and who produces it is at an all-time high, the time for the Canadian pork industry to position Canadian pork as the premium product in the marketplace is now, says Bouma. The challenge, he says, is how the industry is presently organized.
“Canada has a good team with good players, but it takes more than good players to make a winning team. It takes a system with a single vision of objectives and execution among all the players in the value chain. We need a system that links producers and processors together.”
Key to this vision will be to change how consumers experience pork, particularly fresh pork. Right now, says Bouma, consumers find it difficult to tell Canadian pork from U.S. pork. This challenge demands ongoing emphasis on branding efforts. “There is a lot of branding going on right now but we need to go further. We need to take the ball over the line.”
