Canada is a commodity economy. While commodities were suffering as the poor step sister of branded items, Canadian exchange rates were relatively low and it was a nice place to produce things like hogs and export. A significant share (much larger than the U.S.) of canadian pork found its way to finishing houses, slaughterhouses and kitchen tables outside of Canada and all over the world.
When the rise in demand for the lowly commodities began to accelerate in the last few years, engendered by the steamrolling growth of China, India and emerging nations of the world, all of that changed. In order to buy Canadian lumber, minerals and oil, these nations have to demand the Canadian dollar to pay for them. This has resulted in a dramatic increase in its purchasing power especially relative to the U.S. dollar.
This has turned the tables on the economic bonanza Canadians have enjoyed for some years. With the Canadian dollar par with the U.S., and in the face of skyrocketing feed ingredient costs, producers are abandoning production (up to 20% of producers in Ontario quiting), and they are stopping the feeding out weaned pigs, instead shipping them to the U.S. and losing market share globally on pork product exports.
Canadian producers, like everywhere in the world, are optimistic that things will change in the future but are growing increasingly worried that the passthrough of higher grain prices will delay until the bank calls their note, which is of course, the condition necessary to create the pass through. They have suffered losses longer than the U.S. and some are reported to be paying interest only on bank notes to stretch their financial viability to the limits.
Many are worried that COOL will deal the final blow if U.S. packers follow through with their current threats to stop purchasing pigs of Canadian origin when trace-back is implemented. Economic limbo is as uncomfortable as the -25F temperatures of Winnipeg.
