In addition to fundamental public policy precepts stating that specific policies ought not
to contradict one another, there is something singularly perverse about giving false hope
and setting an industry up to fail. Based on the assistance package, some people who
have been losing money in the pork sector may feel comforted, and they (along with
lenders and investors) may even begin to reinvest in the pork segment. But when the
natural comparative advantage is being structurally eroded by policy backing ethanol
mandates and subsidies to make ethanol from grain, the investments in pork will later
prove less profitable, magnifying existing losses and probably driving a demand for
future public assistance.
The ramification is that by simultaneously assisting the pork segment to recover and
underwriting grain-based ethanol production with subsidy and mandates, governments
are paving the way for future losses in pork and increased industry support measures in
the future. Consistency would demand that pork (and beef) policy and bio-fuel policy be
coordinated; to do otherwise is disingenuous to pork and beef producers and a waste of
public money. A means of recognition and implementation of this is to stop further
funding of new grain-based ethanol development in consideration of the pork strategy,
and for that which can be anticipated in beef.
The notion of opening the throttle and applying the brakes at the same time is that
something must give, eventually. Simultaneously assisting the pork and beef segments
on one hand, and legislating and subsidizing grain-based ethanol on the other puts
policies at odds with themselves. Beyond the insincere treatment of hog producers and
the future demand for public support created, the Canadian manufacturing sector is not in
a position to tolerate the fallout in food manufacturing that will be created. The
recognition of these dichotomies appears not to have reached senior political levels.
The Canadian pork segment is grappling with a range of factors outside Canadian control
– exchange rates, burgeoning red meat supply, H1N1, etc. The CPC strategy anticipates
much of this, and presents a cohesive approach that warrants public support. There are
others for which Canadian governments bear direct responsibility. The CPC strategy
makes reference to the enormous problems created by US COOL, which was allowed to
occur on the foreign affairs watch of the federal government. The CPC strategy does not
acknowledge the detrimental impact of Canadian ethanol policy; nevertheless, it has
seriously weakened the competiveness of hog production. These failings, among the
several challenges facing Canadian pork and beef, fall within the control of Canadian
policy makers, and the pork segment is justified in requesting compensation for them.
Moreover, disconnected policies relating to bio-fuels and trade must be resolved with the
red meat strategy if a cost-competitive Canadian pork segment is to reemerge as
envisioned.