MBiz

23 MBiz | may 2016 W hile many sectors of the Canadian economy stand to benefit from the Trans-Pacific Partnership (TPP), the multilateral trade agreement is particularly promising for pork producers. Canada exported more than $3.4 billion in pork products in 2015, which accounted for over 50% of hog production in this country. Those numbers could be boosted substantially if producers gain increased access to lucrative markets such as Japan and Vietnam, as is expected if the TPP is adopted by the federal government. A significant portion of that increased revenue would likely flow into the coffers of pork producers in this province. The Manitoba pork industry is worth an estimated $1.2 billion a year, with exports accounting for $880 million of that total in 2014. Andrew Dickson, general manager of the Manitoba Pork Council, says the TPP would make it far easier for producers to market their products in the Pacific Rim because it would dramatically reduce or eliminate restrictive tariffs and other trade barriers. In Japan, for example, a 4.3% tariff is applied to most over-gate — or over market price — pork products imported into the country. An under-gate tariff is similarly applied on imported pork. TPP would immediately eliminate the over-gate tariff while the under-gate fee would be phased out over 10 years. Dickson says Japan is considered one of the world's most lucrative markets for pork. It's a dietary staple for the country's 126 million people and sells for nearly twice as much as it does in Canada. Last year, Canada exported more than $951 million worth of pork products to Japan, which ranks second behind only the U.S. ($1.45 billion). While increased access to the Japanese market is an enticing prospect, Dickson says it's far too soon to say how it would impact Manitoba pork producers. "This is a long-term operation. It will be 10 or 11 years before it's all revealed. It's not going to happen overnight," he says. "It's like making a cake. A cake has a lot of ingredients, and it's not finished until there's icing on it." One challenge for Manitoba pork producers is the need to increase production capacity, especially at the farm level. Dickson says it's already an issue and will only become more pronounced if demand for Canadian pork increases under the TPP. "I can tell you right now Maple Leaf in Brandon is operating below capacity. They could use another one million pigs a year and they have the markets for them," he says. Increased international demand would also likely mean a need for more workers. The Manitoba pork industry currently employs about 13,000 workers annually when you factor in farm operations, processing plants, the trucking industry and butchering operations. Dickson says there is little chance of the TPP resulting in additional pork imports making their way into Canada, since it's already essentially an "open market." The U.S. currently supplies Canada with about 25% of its domestic pork needs while the Americans import about the same amount of Canadian pork, a situation that is mostly due to a lack of certain cuts in both countries. The agreement between the TPP's 12 signatories could benefit Manitoba pork producers if members are less likely to take part in currency devaluation as a result. Dickson says a Canadian dollar valued at or below $0.85 US is good for producers because it typically means more exports, while a strong loonie can mean trouble. Although the federal government has already signed onto the trade pact, there has been speculation that it could be months before the federal cabinet ratifies the deal, and it may even outright reject it. Dickson says he hopes the new Liberal government follows through on its commitment and ratifies the TPP at the same time as the other member countries. Should it reject the deal or enter into an agreement later than other nations do so, it runs the risk of repeating the same mistake the Conservative government did a few years ago, when the U.S. achieved a free-trade agreement with South Korea first. As a result, Canadian pork exports to South Korea plummeted by more than two-thirds, or about $170 million, in just two years. "We can't afford to lose that (percentage of business) to Japan," Dickson cautions. "That would be an absolute disaster to the pork industry. We would have to close down farms across the country." ■ Japan is considered one of the world's most lucrative markets for pork. It's a dietary staple for the country's 126 million people and sells for nearly twice as much as it does in Canada.

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