Canada's pork industry faces challenge of playing down swine flu
Canada's embattled pork industry is on the defensive against misconceptions that pork products are associated with swine flu, a virus that hasn't actually been linked to pigs.
Both China and Russia have already banned imports of pork products from Mexico and three U.S. states, while other governments have stepped up their screening processes to prevent the spread of the virus.
The swift international response has sent U.S. hog futures prices — which set the selling value of pigs on the market — into a downward spiral.
At the same time, stock prices of major U.S. pork product suppliers like Tyson Foods (NYSE:TSN), and Smithfield Foods (NYSE:SFD) were down about 10 per cent in afternoon trading.
Shares in Canadian supplier Maple Leaf Foods (TSX:MFI) lost three cents to $8.46 on the Toronto Stock Exchange after earlier falling more than one per cent. The company did not immediately respond to requests for comment Monday.
The growing misunderstanding about the cause and carriers of swine flu could have a devastating impact on distressed domestic pork producers, said Paul Hodgman, executive director of Alberta Pork, an industry organization of pork producers.
He said the pork industry has been hit by weaker demand for pork products while at the same time paying higher feed prices.
"The last two years have been extremely difficult for our industry," he said in an interview.
"We've never had a period this bad for this long in the history of the pork industry in Canada."
In recent months, the market has shown signs of a recovery that could solidify later this year, according to Kevin Grier, senior market analyst at the George Morris Centre, an independent agricultural think-tank in Guelph, Ont.
However, the recovery could be obliterated if consumers start to change their spending habits and buy non-pork products, he said.
Any threat of a weaker demand would send hog prices tumbling.
Canadian hog prices are directly tied to sales of hogs in the United States, so pig farmers will likely eat part of the swine flu worries, even if domestic suppliers aren't affected, Grier said.
"The market has to react to what they think people's perceptions are," Grier said.
"If there's declining export demand then packers will respond by cutting back," he added.
Exports have been a cornerstone for the domestic hog industry. Canada is one of the top three farm animal exporters in the world, and it ships about 60 per cent of farm animals outside the country to about 100 countries, Hodgman said.
However, Richard Besser, acting director of the U.S. Centers for Disease Control, emphasized that swine flu is not spread by food.
"You can't get this from eating pork," he said. "Cook your pork appropriately so you don't get other infectious diseases, but influenza is not transmitted from eating pork or pork products, they are safe."
That message has been echoed by other advocate groups for the pork industry, which are trying to cushion the impact this could have on Canadian pig farmers.
"We're certainly attempting to communicate this with our exporting agencies and working together to try to explain this to other countries' jurisdictions or potential purchasers of our Canadian pork," said Gary Stordy, a spokesman for the Canadian Pork Council.
However, Stordy acknowledged that producers are ultimately powerless to their purchasers' final decision.
"If these countries want to do this for whatever reason it may be they'll proceed this way," he said.
A spokesman for pork product maker Olymel LLC, based in St-Hyacinthe, Que., said the company is closely monitoring swine flu developments, but that it hasn't heard any concerns from other nations that buy its products.
"There's no sign from any countries we export (to) that they want to stop," said Richard Vigneault.
He estimates that about 50 per cent of Olymel's finished pork products are shipped outside Canada.