041126 Canadian Hog Producers Benefit from Canadian Subsidies

Washington, DC - The United States Department of Commerce announced Oct. 15 that their preliminary dumping determination was that provisional antidumping duties of approximately 14% of the declared United States customs value of the hog will be placed on imports of live hogs from Canada.

"Canadian hog producers unfairly benefit from huge subsidies that cause over- production in Canada and allow Canadian producers to sell their hogs in the United States at artificially low prices," said Jon Caspers, past National Pork Producers Council president and hog farmer from Swaledale, Iowa. "The onslaught of low-priced hogs from Canada has pushed down U.S. hog prices and inflicted severe financial hardship on U.S. hog producers."

According to Caspers, even though economic conditions for the United States hog industry have improved, oversupply in Canada is forcing profits and prices lower than what they would have otherwise been.

Iowa State University economist Dermot Hayes has analyzed Canadian agricultural data. His estimates say that Canadian hog producers receive benefits ranging from $4 to $6 for the federal subsidy programs, while Quebec producers receive as much as $15 per pig.

Hayes looked at two different Canadian subsidy programs. One is only available to producers in Quebec and the other is available nationwide.

"The first is available only in Quebec and essentially guarantees the pork producer will make as much as an industrial worker," Hayes said. "The second is available nationwide. It's a federal program and it allows producers to lock in the Olympic average of the last five years of income."

As far as United States producers paying a duty on imported hogs from Canada, they do not pay anything, according to a fact sheet from the NPPC. However, according to Mary Staley, an attorney with Collier Shannon, the U.S. Commerce Department has published in the Federal Register that importers of record are required to post a bond.

"There's been no final assessment of duties at this time. A lot of producers here in the United States have been told there has been assessed an actual duty of something around $5 a head," Staley said. "But, that's not an accurate characterization of what's happening in the dumping case.

"Instead there's just been a preliminary determination of dumping by the Canadian producers and any entity that is the official importer of record of the hogs coming into the United States has only been required to post a bond," she said.

The importer of record is a technical description of the person who actually files the customs documentation with the United States Customs Service. According to Staley, the importer of record, in many cases, can be a foreign entity.

"It can be a Canadian company. There's no prohibition to a Canadian entity being the importer of record," Staley said. "Whoever is the importer of record is the entity that has to post the bond. The final assessment of duties, if this case goes all the way through to its natural conclusion, the final assessment of duties would not occur until the earliest June 2006."

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