Canadian herd expansion continues apace
According to the latest figures from Statistics Canada, the total number of pigs in Canada reached 14.3 million head in January 2018, 3% higher than year earlier levels. This represents the fourth consecutive year of expansion for the Canadian pig industry.
According to the USDA, Canadian pig meat production in 2017 reached 1.96 million tonnes, which was 2% higher than the previous year. The latest census results suggest further growth can be anticipated in 2018, particularly in the short term with young pig numbers up 7%, and piglets up 3%. Looking further forward, the number of breeding pigs also increased 1% on year earlier levels to 1.27 million head. As such, more modest production growth might be expected in the second half of the year. Reflecting uncertainty surrounding the outcome of the current NAFTA negotiations, the pace of industry growth might now be expected to slow from here.
With pig meat production expected to increase in both Canada and the US this year, both the domestic and export markets will need to be strong if the industry is to remain profitable. In 2017, Canadian pork exports were stable on the year at 960,000 tonnes as growth to Japan, the Philippines and Taiwan compensated for lower shipments to China and the US.
Increasing production from the US means exports are likely to continue declining to this market, which accounted for 30% of Canadian pork exports in 2017. As such, Canada’s reliance on the Asian markets could increase, intensifying competition with EU exporters. The launching of a pilot project for the export of Canadian chilled/fresh pork to China, may help support volumes. However, the impact of this could be minimal, as only meat from approved slaughter facilities would be eligible. With Chinese pork production anticipated to continue expanding, and consumption growth stagnating, uncertainty remains over the direction of the market this year and which suppliers might be able to gain market share.
Increasing Canadian production might also increase the risk of rising exports to the EU, with access conditions improved under CETA. Although high EU production levels and stagnating demand means volumes will likely remain small. In fact, Canada is currently a net importer of EU pork, and the CETA arrangement may see the EU occupy an increasing share of the import market- if product can compete with dominant US supplies. So overall, while increasing Canadian production brings challenges for EU pig meat, improved access to this market could also offer opportunities.
Bethan Wilkins, Analyst
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