The United States’ Country of Origin Labeling (COOL) regulation has Manitoba’s hog producers in a difficult situation.

The COOL regulation requires that all Canadian full-grown hogs processed in the United States be segregated from U.S. hogs during the entire processing cycle. It is too costly for U.S. processors to keep Canadian hogs segregated as per COOL regulations. This has led to a dramatic decrease in the number of full-grown hogs Canada can sell to U.S. processing plants.

Originating from lobbying efforts by U.S. farming interest groups the Rancher and Cattlemen Action Legal Fund and the National Farmers Union, COOL is “a subtle way of keeping us out,” said Andrew Dickson, general manager of the Manitoba Pork Council.

“Prior to the COOL, we were shipping approximately 1.3 million finished pigs annually to the United States for processing,” said Dickson.

Now that full-grown Canadian pigs must be processed separately, this number has dropped to 150,000. Representing approximately $200 million of the Manitoba economy, the hog industry is eclipsed only by hydro exports.

Other contributing factors to the decrease include the strength of the Canadian dollar, the U.S. food-to-fuel policy, H1N1 and the global decrease in demand as a result of the recession, said Perry Mohr, chief executive officer of the Manitoba Pork Marketing Co-op.

The Obama administration is considered protectionist by industry representatives and academics alike.

“ The unfortunate thing is damage has already been done. Farms are closing and people have moved on.

Andrew Dickson,  Manitoba Pork Council

“This is not the time in economic history to be doing this,” said Dickson. “Not with the world economy so fragile.”

Manitoba is dependent on access to the U.S. processing market, since it is too costly to open more processing plants in Manitoba in the short run. Canada’s remaining avenues are to either take the issue to a World Trade Organization (WTO) panel or launch a challenge under the North American Free Trade Agreement.

The federal government is requesting that the WTO draw up a formal panel to hear Canada’s case on this regulation.

The government is also providing $75 million worth of assistance in the form of short-term buyouts and repayable loans. The buyout component will temporarily retire farms, allowing them to go out of business for three years, while the repayable loan will assist those producers who choose to stay in the industry.

“We’re very appreciative of the federal government for acting on this issue on our behalf,” said Dickson. “The unfortunate thing is damage has already been done. Farms are closing and people have moved on. Some farms may be able to open again, but meanwhile a lot of people have suffered significant financial loss.”

Published in Volume 64, Number 7 of The Uniter (October 15, 2009)