Ontario eyes cost of Russian ban on food Canada produces

Thursday, August 7, 2014

by SUSAN MANN

Ontario is studying the ramifications of the recently-announced Russian trade ban on Canadian agricultural products “to better understand how this will impact business,” says Jeff Leal, agriculture, food and rural affairs minister.

In a prepared statement, Leal says he has reached out to the Ontario pork sector as that industry accounts for “the majority of our exports.” In addition, the government remains committed to finding new markets for Ontario-grown foods and products around the world.

In 2013, Ontario exported about $18 million worth of pork and pork products to Russia and that represented seven per cent of Canada’s overall pork and pork product exports to Russia. Quebec represented 63 per cent and Manitoba represented 24 per cent. But Ontario may face some additional impacts depending on how the Russian sanctions, slated to be in place for year, affect Quebec because about 15,000 Ontario pigs a week go to Quebec for processing.

In a separate email, press secretary and communications assistant, Bryan Bossin says in total Ontario’s agri-food exports to Russia in 2013 were about $37 million and that’s about 0.3 per cent of Ontario’s total agri-food exports. The top five Ontario commodities shipped to Russia were:

• Red meats - $18.3 million  (the majority of this was pork).
• Poultry and eggs - $6.7 million.
• Other animal products - $3.5 million.
• Animal feeds - $3.2 million.
• Seeds for sowing - $1.6 million.

The trade disruption will have very little impact on the province’s pork farmers says the Canadian Pork Council. “For the most part in Canada we do work off the American price and that price should stay relatively stable because they didn’t have a large Russian market,” spokesman Gary Stordy says.

LeaAnne Wuermli, Beef Farmers of Ontario communications manager, says the sanctions won’t have much of an effect on Ontario beef farmers as Russia is a minor export market. In 2013, Canada exported less than 50 tonnes of beef to Russia. Canada had access to supply boneless beef and bone-in beef from cattle under 30 months of age. But Russia also had stipulations that the beef it imports be hormone and ractopamine free.

Stordy says this isn’t the first time there has been a disruption in Canada’s access to the Russian pork market, which is Canada’s third largest market for pork after the United States and Japan.

Last year, just $260 million worth of Canadian pork was exported to Russia due to a six-month disruption in trade because the Russians wanted ractopamine free pork. “We had to document some of our procedures and certify plants to get them approved to ship to Russia,” he says. The 2013 export number is $232 million less than in 2012 when $492 million worth of Canadian pork was exported to Russia.

But exports seemed to be rebounding this year as from January to May; there was $213 million worth of pork exported to Russia. The Russians were mainly buying frozen pork trimmings and various cuts of meat for use in sausage making and for stews, he says, adding sausages are very popular in Russia.

Stordy says “these are self-imposed sanctions and we’re scratching our head to understand if they fully thought through the impact of their decision.” The big question right now is what happens to products that are in various stages of being transported to Russia, including product in Canadian processing plants that has been packed in containers and is ready to be shipped out, various containers en route to Canadian ports from processing plants, some product in transit on container ships and still more on the ground in Russia waiting to clear customs.

Canadian processors will have to repackage the Russian-destined pork and divert it to another market. While this most recent Russian trade disruption is unwelcome, the Canadian pork industry will be able to work around it, he explains. “We’ve adapted in the past and we can adapt moving forward.”

Since the pork is frozen it can be diverted to other markets but Stordy says it’s too early to say where it will go to. “Fortunately we’re dealing with a situation where pork is in demand” and Canada has the option of shipping to more than 140 countries.

Jim Laws, Canadian Meat Council executive director, estimates 10,000 to 12,000 tonnes of pork are currently on ships bound for Russia. If Russian authorities don’t allow the product to be unloaded “then we will endeavor to get the product returned to Canada or have the ability to redirect it to another customer. It will probably end up coming back to Canada, but we shall see.”

With the 2013 Russian trade impediments, Stordy says the Canadian pork industry was able to find other markets, including the United States and Asia. “We expect to do it in 2014 too.”

The trade disruption will have very little impact on pork farmers. “For the most part in Canada we do work off the American price and that price should stay relatively stable because they didn’t have a large Russian market,” Stordy says.

Russian imposed the agricultural trade sanctions on Canada, the United States and other countries that imposed restrictions on Russia due to its aggressive intervention in Ukraine.

Laws says it’s too early to say how disruptive the sanctions will be on the Canadian meat industry, but it’s mainly pork that’s affected as Canada doesn’t export much beef to Russia. Canada exported $3.2 billion worth of meat in 2013 worldwide and that means “we have a lot of other customers.”

There will probably be a global market shuffle where Russia will buy pork from countries that haven’t imposed sanctions against it and those countries will need additional pork supplies and “we’ll supply it,” he says. BF