Russian Ban on Food Imports Erodes Pork Industry Profitability

Aug 14, 2014

By Bruce Cochrane

The chair of Sask Pork estimates Russia's ban on Canadian pork imports will cost Saskatchewan pork producers about 20 million dollars.

In response to sanctions imposed over the crisis in Ukraine Russia has banned certain food imports from Canada, the U.S., the European Union, Australia, and Norway, including meat, fish, milk and milk products and fruits and vegetables for a year.

Florian Possberg, the chair of the Saskatchewan Pork Development Board, notes about 70 percent of the pork produced in Canada is exported and Russia was our fourth largest destination.

Florian Possberg-Saskatchewan Pork Development Board:
So far in 2014, between January and May, we shipped over 200 million dollars worth of pork to Russia so losing that market at the same time as some of the typical back door methods of getting pork into Russia have been closed through the Ukraine and Europe as well means that there is a change in the supply demand situation for pork and as a consequence the futures, the Chicago Mercantile lean hog futures have dropped about five to seven cents a pound which is over ten dollars a hog.

Now there's other factors at play as well but there's no question that that impacted our price and the price perception.

Saskatchewan, we would produce just under two million hogs a year.
If we're looking at five to ten dollars a hog reduction, we're looking at a 20 million dollar change to our bottom line.

Possberg acknowledges pork producers are still making money but from 2007 to 2013 the Canadian pork industry faced huge losses and producers were counting on 2014 to fill an equity hole so anything the Canadian government can do to improve market access is in our benefit.

Source: Farmscape