B.C.'s beef and pork producers are hoping for a quick resolution to the ban placed by Beijing on Canadian meat exports in late June, but officials also note that China’s meat-supply situation may compel Chinese authorities to lift the ban anyway.
The response comes after China banned all Canadian meat imports as of June 26, citing the discovery of false veterinary certificates after customs officials found ractopamine in Canadian pork bound for the Chinese market. The food additive is banned in China and the European Union but legal in Canada, the United States and Japan.
Jack DeWit, chairman of the BC Pork Producers Association, said B.C. has only about 15 pork producers left, compared with hundreds or more in provinces like Quebec and Manitoba. But prolonged disruptions to exports to China would have a ripple effect on B.C. because products from other parts of Canada originally marked for China would then need to find an outlet elsewhere, creating a supply glut.
“Big or small, a producer has to be able to get rid of their stock,” DeWit said. “Across all the provinces, we export about 70% of what we produce. So when there’s an interruption in trade, it affects everybody. We are not a big part of it anymore, but we are still a part of it; and what happens in other parts of Canada affects the producers we have here, too.”
According to the Canadian Pork Council, China, the world’s largest consumer of pork, is Canada’s second-largest export destination by tonnage (283,216 tonnes in 2018, behind the United States at 346,834 tonnes) and third-largest by value ($514 million last year). Before the ban announced in late June, pork exports to China had increased 50% year-over-year in 2019, partially because Chinese domestic supply has been stricken by the African swine flu.
B.C.’s pork production amounted to 516,915 hogs in 2017, far below major producers in Quebec (8.7 million), Manitoba (5.4 million) and Ontario (4.1 million).
DeWit also noted that Beijing might be forced to accept high-quality Canadian pork over the long run because the African swine flu epidemic in China, which has also hit Vietnam and some surrounding Asian countries, has caused Chinese producers to cull as many as 1.1 million pigs thus far this year.
Some experts are calling the epidemic the largest animal disease outbreak in history. The disease is harmless to humans but is deadly and highly contagious among pigs.
The sudden shortage of pork has pushed global pork prices up by as much as 40% this year, and DeWit echoed the Canadian Pork Council’s statement that the “halt in Canadian exports is not the result of a food safety concern but the misuse of Canada’s reputation as a supplier of safe quality products.”
“China very much needs our pork at this point,” DeWit said. “They’ve lost a lot of their own production, so they are looking to buy…. We are not selling over there because we have to or at lower prices; we are selling there because we have a good product. They want it, and they are willing to pay for it. The Chinese want it resolved as much as we do.”
According to a statement from the Chinese Embassy in Ottawa, the ractopamine investigation conducted by customs officers found there were 188 forged veterinary health certificates attached to Canadian pork shipments. It added that the discovery “reflects that the Canadian meat export supervision system [has] obvious safety loopholes.”
In response, Canada’s agriculture minister, Marie-Claude Bibeau, and international trade diversification minister, Jim Carr, have stressed that there is no health issue related to Canadian pork. Ottawa is treating the matter of inauthentic certificates as a “technical issue.”
At a July 3 press appearance in Montreal, Bibeau said the key now is to assure Chinese authorities of the soundness of Canada’s meat export certification process. Only when that assurance is achieved, Bibeau said, will the Chinese reopen the door to Canadian meat exports. Meanwhile, the federal minister also declined to speculate as to when the ban would be resolved.
“The shorter, the better,” Bibeau said, adding that Canadian officials will introduce new certification measures to ensure similar issues do not arise again.
“We are really working hard to reassure our Chinese partners to open the market.”
Caught in the crossfire are B.C.’s beef producers. The Chinese ban on Canadian meat exports extends to beef, even though the dispute arose from issues with pork shipments.
Kevin Boon, general manager of the BC Cattlemen’s Association, said producers are “disappointed” with the export ban, but he added that China, while having the potential to become an enormous market for beef, isn’t a big enough buyer to significantly affect the Canadian beef industry.
“For the overall Canadian aspect, about 1% of what we produce in Canada ends up in the Chinese market, which amounts to about $97 million worth of product,” Boon said. “So while it is significant, we are diversified enough in our markets that this is not going to affect us. We can distribute that product elsewhere when there’s a closure like this.”
Separate data shows beef exports to China amounting to about $63 million so far this year. Within Canada, B.C.’s 192,000 head of beef cattle as of 2016 account for only 5% of the national total. Alberta, in comparison, has 1.57 million head (40.9%).
Canadian Cattlemen’s Association data shows beef exports (totalling $2.75 billion in 2018, or 398,580 tonnes) dominated by U.S.-bound products, which account for 74% of all exports. China/Hong Kong currently ranks third on the scale but accounts for only 7.7% – a little over 30,000 tonnes. But Boon did note that the potential for future growth is tremendous in the Chinese market, because Beijing only recently lifted a restriction on having bone-in beef products in the under-30-months category – something that could dramatically open China to Canadian beef when the meat ban is lifted.
“They’ve now made it so that, for under 30 months, we can have bone-in – and that makes a huge difference,” Boon said. “Because before, if a bone chip makes its way into a container of hamburger, they can condemn that whole load. Whereas now that this has opened up, it’s a lot less risky to export over there…. The biggest risk now in this is, how long is the market closed for? The customers we do have over there now, we won’t be able to supply them as long as the market’s closed. We stand to risk losing those customers, because they’re going to go somewhere else.”
But Boon added the main attraction of China for Canadian beef is the potential new markets, so losing existing clients, while not ideal, is manageable. He added that this lull might be a good opportunity for Canadian beef exporters.
“We’ve heard a lot of rumblings about this situation being due to some of the disputes that are ongoing between Canada and China right now, and I guess I find that a little hard to accept given the fact that their food traders over there are not dummies,” he said. “They know they’ll require protein, so I can’t see them shooting themselves in the foot in terms of food security over [the current situation]…. The shorter the duration of closure, the less market disruption there is for us. And I think that would be better for China, as well.”
Boon also noted that another Asian export market – Japan, the No. 2 destination for Canadian beef (8% of total exports) – is opening due to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
The news comes amid the rapidly deteriorating relationship between Canada and China stemming from the arrest of Huawei Technologies Co. Ltd. CFO Meng Wanzhou due to a U.S. extradition request.
But Boon said Canadian meat exports to China benefit both countries, and might work as an icebreaker for other talks if Ottawa and Beijing can see eye to eye on lifting the meat ban.
“As a glass-half-full guy, if we can resolve our dispute over meat quickly, maybe it will help them get to the table to resolve other issues,” he said. “I’m optimistic they will work hard at it, but I’m also not naive enough to think that politics isn’t involved in every trade deal. We always have to deal with politics when we create these [trade relationships].” •