By Cam Dahl, Manitoba Pork
Canadian governments and industry have responded to trade interruptions and global uncertainty with a common refrain: diversify our markets. This is the response in the face of disruptions with our largest trading partner, the United States. It has also been a response to tariff disputes with China. To its credit, the Government of Canada is actively seeking multiple new trade agreements (some might not make sense, but that is another commentary). The problem is not that this is the wrong pathway. The problem is that we often treat diversification as a slogan instead of strategically enabling farmers, processors and exporters to achieve the objective.
To be clear, the responsibility for realizing diversification is not only the job of government. Industry has a responsibility to step up to the plate as well.
Hog production and pork processing in Canada are critical components of the national GDP. In Manitoba alone, the industry annually contributes $2.3 billion to the provincial GDP and supports 23,000 jobs in both rural and urban centres. Almost all of this contribution is driven by exports. Ninety per cent of the 8.5 million pigs raised in Manitoba are exported, either as live animals to be finished in the U.S. or as pork products shipped around the world. To say that hog farmers pay attention to international markets would be a massive understatement.
The exposure to the whims of U.S. trade policy is significant. We are never going to replace U.S. demand for our weanlings, but what do we need to do to limit this risk? The answer is almost a cliché. We need to finish more pigs and process more pork here at home.
The opening paragraph of Manitoba’s recent Economic Development Strategy states that “In the face of economic uncertainty driven by tariffs, it’s especially important for Manitoba to have a plan to develop our economy in a way that takes our future into our own hands, and also invests in Manitoba businesses, producers, workers, and families.” Manitoba Pork believes that hog farmers, pork processors and supporting stakeholders can significantly contribute to this objective if the hurdles to growth can be overcome.
Manitoba Pork also wholeheartedly agrees with the provincial government’s commitment “…to fostering a growing and competitive agriculture and agri-food industry as a key driver of the provincial economy.” How do we turn this aspiration into reality?
With the right conditions in place, the level of investment in plant and barn expansions in Manitoba could exceed $1.5 billion. With a new hog finishing site costing in the range of $15 million, the ability of producers to access long-term, stable and affordable financing is a significant barrier to accomplishing the goal of growing our capacity.
Announcements have been made about the development of capital funds. For example, Farm Credit Canada recently announced a $5 billion fund to be created in conjunction with private-sector investors. The federal spring economic update also revealed the creation of a $25 billion sovereign wealth fund. These announcements are all well and good, but they will not unleash the growth waiting to happen if capital remains unavailable to farmers. Governments need to move beyond catchphrases. Industry stakeholders need to be brought to the table to ensure the policies are in place to deliver capital to the farm gate.
Investment to increase hog finishing and pork processing in Manitoba will not only reduce reliance on U.S. markets, but it will also create jobs in rural and urban areas, open up additional local opportunities for other sectors of the agricultural economy such as feed producers, and increase the resilience of our rural communities in uncertain markets.
Current global instability and concerns over our trade relationship with the U.S. have been a wake-up call for Canadians. But trade diversification should not just be a reaction to crisis. It should be a permanent component of economic strategy. The countries that will succeed in the new global trade environment are the ones that invest steadily in relationships, infrastructure and competitiveness long before problems emerge.
Canada has many of the advantages needed to succeed, including a strong reputation as a reliable, high-quality supplier of food, abundant resources and proximity to major markets. What has been missing is not potential. It has been urgency and follow-through.
