By Will Verboven Contributing Editor
The SCOTUS ruling supporting the California legislation regulating hog and poultry production practices will have repercussions beyond the U.S. border. Unlike the cattle and beef industries, the North American hog and pork industry is highly integrated. However, when livestock and meat trade issues arise, the smaller Canadian partner usually suffers the consequences. Those issues usually get resolved, albeit the same trade issues seem to recur all too often. But what’s different this time is that a marketing issue will impact Canadian exports, and it’s not even a cross-border trade issue. It’s like California is its own country, being their regulations affect not just Canada but the other U.S. states marketing pork in that state.
And it’s not just Canadian pork that will be affected. There is a unique hog trade that sees 800,000 Canadian weanlings and feeder hogs exported annually to the U.S. Midwest for finishing and harvest. Repercussions from the California regulations will be felt on the Canadian prairies, the source of the weanlings. Also, one expects excess pork will be dumped on foreign markets where both countries are fierce competitors. It’s not a pretty picture, and there will be a negative impact on the beef market – although, with current high retail prices, it’s hard to see it coming – yet.
One expects beef industry economists and market analysts are trying to ascertain the impact of the California ruling in the near term and its precedent-setting nature for cattle production. If millions of tons of pork that are ordinally sold in California but now cannot because they are not certified as raised according to new state regulations, that tonnage will be looking for a new home, most likely in the rest of the United States and Canada. That means really cheap pork that could entice even dedicated beef eaters to buy more pork chops instead of beef steaks. Curiously, as obvious as that meat-buying decision may be, it has not been the trend in western Canada, where pork has been remarkably cheap for some time.
Beef at the retail counter up here has been selling at some of the highest prices in memory. High-end $40 steaks and $100 prime roasts are seen, much to the chagrin of beef producers who don’t see those prices translate into more equitable cattle prices. Yet even when confronted with those high prices, consumers are still buying beef. Compare that with a couple of pork chops for $10, and still, there is no stampede to significantly buy more pork. One might surmise that it doesn’t seem to matter how much cheap pork is on the market; consumers are still willing to pay premium prices for beef – and that’s a good thing. That may question the principle of price influence on meat substitution.
To deal with that unfortunate reality, Canadian pork growers and processors are severely cutting back production. I suspect the level of enforcement by California and its exact implementation of the regulations will affect pork coming into that state. That will affect how much surplus pork will hit the North American meat market and start to affect beef consumption. Time will tell.
Having said all that, it’s the precedent-setting nature of the California legislation and SCOTUS ruling on the rest of the livestock industry. The concern is that restrictive animal production legislation will spread to cattle production – specifically the cattle feedlot industry. It would seem that, considering the cunning and sophisticated strategy employed by those opposed to animal agriculture, the industry needs to be prepared to be attacked from any angle in order to forestall production restrictions.
Expect disinformation and deceptive images to tug at the sympathetic heartstrings of city folks and gullible, conniving urban politicians. It’s all a goldmine of mischief for the anti-agriculture coalition lined up against the industry. The California legislation and SCOTUS support show the power of such folks to manipulate public opinion. Ironically, I expect most of those who support the restrictions would never have been near a modern commercial hog production facility. My point is, don’t presume that truth and fairness will rule the day for how cattle are grown; it didn’t work for hog producers. Many outside of ag tend to believe their first impression; if that comes from those opposed to animal agriculture, it’s always the worst.
The expected Canadian government’s attack against the cattle feedlot sector will come from a different direction. It won’t involve imposing restrictive handling practices (although that’s always a possibility). It will come from imposing carbon emission regulations and new taxes on cattle methane production. That approach will have a similar impact on the industry by making cattle production more expensive, thereby driving up the cost of retail beef to prohibitive levels. Invariably, more government regulations will drive feedlot operators to get out of the cattle business, and that’s probably the Canadian government’s anti-meat save-the-planet plan.
I suspect that’s what many exasperated U.S. hog producers may also be thinking.
