This paper discusses several different topics pertaining to Alberta’s pork industry. It will discuses international issues, the Danish pork industry and what Canada can learn from it, Canadian pork industry versus the United states pork industry and what changes Alberta and Canada can make to stay competitive. I will conclude that Alberta needs to think beyond the United States and look at increasing consumption internally and also look at new markets and how they can break into those markets. I will also explore if Canada can employ the model used by Denmark’s pork industry and how that may benefit them.
Alberta Pork, it’s something that we know is there, most of us eat it but not many of us know that challenges that face the industry. The landscape of pork production and consumption is changing and Alberta’s pork industry has to adapt to those changes in order to stay relevant and competitive on the world stage. International Issues There are many international issues facing today’s pork industry. The first one that comes to mind is religion. There are many regions in the world that forbid people from eating pork.
Any country with a predominantly Muslim country would be a difficult market to make any sort of progress in, it would be best to not waste resources trying to get into these markets. Another major issue that has been in the spotlight in the past two year is animal disease. With the media attention that H1N1 got and with it initially being called the swine flu, the pork industry took a big hit. Even though you could not get H1N1 from eating pork the “pork industry [was] hit by weaker demand for pork products while at the same time paying higher feed prices.
” (The Canadian Press, 2009). There were also the several outbreaks of foot and mouth disease overseas in recent years, which also hurt the international reputation of pork. Even with those factors the consumption of pork is still on the rise in regions such as Asia, Africa and Latin America (Alberta Pork, 2006) and this presents another challenge for Alberta pork producers. Many countries such as China produces a much higher volume of pork than Canada and this makes it difficult to compete with them.
For now though China is not a major exporter of pork due to problems in their value chain and an inability to meet international consumer demands. (Alberta Pork, 2006). Another country that has an advantage over Canada in production Brazil. “The low cost of feed, land, buildings and labour all contribute to Brazil’s distinction as home to the lowest pork production costs in the world” (Alberta Pork, 2006). Brazil’s exports are on the rise and they are a major competitor to Canada in the international market. In order to compete with Brazil, Canada would have to try to lower their cost of production.
One of these costs is the cost of feed, the cost of Alberta barley is quite high especially when you compare it to the cost of the corn which US producers feed it pigs. US corn is heavily subsidized, so much so that producers can sell the corn for lower than it cost to produce it. Alberta pork producers have to look into ways to lower their cost and lowering the cost of feed would be a good step, whether this is through cheaper farming methods or the industry going to political route and lobbying the government for subsidies.
Danish Successes The successes of Danish pork producers can be mainly attributed to the way they produce the pork. They Danish have a very centralized production with the number of slaughterhouses decreasing from 40-50 in the 1970’s to just 2 today. (Hamann, 2004). This structure has allowed the industry to maintain very high standards for food safety and the ability to trace the product from beginning to end.
The cooperative structure of the industry has also allowed for the production of “made-to-order” good that care customized to the markets that they are being sold to and the ability of the slaughterhouses to fulfill specific volume and standard orders from international processors. If Alberta pork producers want to be more competitive they should consider following the Danish model. Right now the Alberta industry is made up of large and small producers, if they were to follow the Danish model and consolidate into fewer farms and slaughterhouses they may be able to reduce overall costs.
This consolidation would allow for the industry to have state of the art facilities and be able to maintain the same food safety and traceability standards as Denmark. In order to achieve this model it would take the cooperation of many independent producers and processors coming together but if this could be accomplished to would be greatly beneficial to the industry. Like the Danish, Alberta could start being a “made-to-order” producer known for high standards and the name “Alberta Pork” could carry the same brand potential as “Danish Pork” does in the international market.
American Pork vs. Canadian Pork America and Canada’s economies are heavily linked to one another and this is no different in the pork industry. Since NAFTA came into effect there has been an increase in cross boarder trade to the benefit and also detriment of many industries. US pork producers have a great advantage over Canadian producers because of their lower costs of production; they also have a bigger producing capacity with their largest 29 plants producing 21,000 hogs/day while Canada’s 29 largest plants produce just 3,200 hogs/day.
(Alberta Pork, 2007) This is not the only advantage the US has over Canada; many of the US plants also run double shifts while Canadian plants have trouble doing that due to labour shortages (Alberta Pork, 2006). The US industry also uses heavily subsidized corn to feed their pigs while Canada uses the more expensive barley and until a solution for the rising cost of barely is found the US will continue to hold a competitive advantage over Canada in that department.
With the US having a clear production advantage and lower cost of production in certain areas the US has started dumping their cheap pork in Canada while the amount of Canadian pork export to the US has decreased. With Canada’s inability to run double shifts and the feed issues, the US will continue to out produce so Alberta has to find other ways to compete. Three key areas that the industry should look at is, new options for processing capacity, which many include training more people, bringing in foreign labour or even building or buying facilities in other countries.
They should also look at new or more efficient feed grain solutions to compete with the US’s heavily subsidized corn. One final thing is rethinking the pork value chain and creating a feeling of partnership between producers and processors. (Alberta Pork, 2007) Canadian pork producers need to look beyond the US and see the potential of other markets, they need to look at the Danish model, which relies heavily on exports, and adapt to the changing market landscape. The Canadian industry needs to see their advantages in things such as land, water and a big supply of domestic grains.
Canada’s pork industry has to get over their dependence on US exports they need to increase their consumption right at home, with good public relations and innovative marketing campaigns. The bottom line is the Canada’s pork industry needs to like outside the box. They need to explore other ways to use their product and by-products, such as bio-fuel. They need to get their name out there as a high quality brand and to look ahead to new ways of doing things and new people to do them with. Works Cited Alberta Pork. (2006).
Global Pork Production: Meeting the challenge in a changing world. Edmonton: Alberta Pork. Alberta Pork. (2007). Pork Poducers Face the “Perfect Storm”. Edmonton: Alberta Pork. Alberta Pork. (2006). Status of the Canadian Pork Processing Industry. Edmonton: Alberta Pork. Hamann, K. (2004). An Overview of the Danish Pork Industry Integration and Stucture. Hoersholam: IFAU. The Canadian Press. (2009, April 27). Canada’a pork industry faces challenge for playing down swine flu. Retrieved October 17, 2010, from CBC News: www. cbc. ca/consumer/story/2009/04/27/prk. html#ixzz12vpPJMa6
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