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CANADIAN PORK BANNED FROM CHINA SEEKS NEW HOME

Canadian pork exports in the first half of the year moved up slightly (+1%) to 495,200 tonnes. Rising global pork prices meant the value of the trade totalled C$1.72 billion, up 9% on a year earlier.
 
Growth to the Chinese market was key in supporting shipments overall. Trade increased by over 50% in volume terms, and almost doubled in value, as the ASF crisis led to increased demand for imports. Over 34% of Canadian pork meat exports went to China so far this year totalling 172,000 tonnes. This increase in Chinese exports was particularly important, as shipments to the US recorded a 21% decline (-29,000 tonnes). This reflects expanding US production, and exports to China have been constrained by prohibitive tariffs.
 
In June, China moved to suspend all imports of pork from Canada, citing ractopamine contamination* and forged export certificates. This forms part of the ongoing political tensions between the two countries. The move displaces a large portion of Canadian pork exports. Pig prices fell in the immediate aftermath; some reports also suggest the overhang affected EU prices.
 
What other markets might be able to compensate?
 
Canada has been gaining market share in Japan, thanks to the CPTPP, though absolute volumes have been quite stable this year.
 
As of late 2017, the EU also has a trade deal with Canada that incorporates a tariff-free pork quota. There was a rise of 5% in Canadian pork meat exports to the EU in the first six months of this year. However, volumes remain under 1,000 tonnes, well below the quota limit.
 
Canada exports some of this pork meat directly to the UK, totalling 114 tonnes in the first half of this year. Whilst this is an increase of 170% from the same period last year, volumes remain small.
 
Reports suggest interest in exporting to the EU has so far been limited, due to difficulties in complying with EU regulatory standards. Ractopamine usage is just one element of this. However, could interest in achieving compliance increase now there are difficulties on other markets?
 
A particular concern for UK markets arises with the threat of a no-deal Brexit. Canadian pork would be price-competitive under the government’s proposed tariff regime.
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