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Fall 2010 Hog Industry Update

February 3, 2011 Issue 5, PEI Hog Commodity Marketing Board No Comments

A rise in market prices through the summer has brought the return on hogs to a level equal to the cost of production. While early October, with its usual conflicting reports of harvest yields, has caused the hog cash and future values to wobble, the 2011 year is looking promising.

Interestingly, In early August of this year, the hog price in the United States hit a historic high. Here in Canada, that same price translated into $1.63 per kilogram. For local producers that falls within the break-even range. If that same price had occurred in December of 2000, with the US Exchange rate at the time, that same price here in Canada would have been over $2.25 per kilogram. If parity with the American currency is the new norm, the Canadian industry will have to find new ways of returning to sustainability for the foreseeable future.

The recent decline in the production base in PEI has leveled off. In September, the first shipments of organically raised hogs were marketed to Du Breton packers in Riviere-du-Loup, Quebec. These hogs will be incorporated into Du Breton’s natural and organic line of products, which are marketed mostly in the northeastern USA.

This summer, the Canadian Pork Council took its next steps towards the establishment of a new board. Once established, this board will be moving forward with the promotion of Canadian pork in an attempt to win back the 30% plus share of domestic consumption that has been lost to imported pork. Imports have not only displaced Canadian production in the store shelves, but have made it difficult for smaller abattoirs to remain competitive. Tony’s Meats in Antigonish, NS cut back its hog processing by 50% as the hog price rose to a level which did not allow for a positive margin against cheaper imported, locally sold pork.

With much uncertainty still lingering in the processing sector, the Hog Board was inclined to put a hold on a feasibility study regarding the re-establishment of a federally inspected processing facility in the Maritimes.

Hog Industry Update

October 7, 2010 Issue 3, PEI Hog Commodity Marketing Board No Comments

Hog Industry Update – Spring 2010

The past few months have continued to be an evolving environment for Island hog producers.  In late February, Maple Leaf Foods announced they would be closing the hog processing line at their Berwick facility in Nova Scotia due to the inability to secure enough hogs to keep the operation viable.  This meant finding another home for anywhere upwards of 1,000 PEI hogs per week.  Since the closure of the hog kill in Berwick (the plant continues to manufacture processed meats) on March 26th, these hogs have been transported to Viandes ASTA in St-Alexandre Quebec.

The Federal Hog Industry Transition Program ran the last of four auctions on March 10th and the overall result of the program saw 423 successful bids that will remove almost 130,000 sows from the Canadian breeding herd.  This will remove any short term over supply in Canada, but in some cases has left questions as to the potential shortage of hogs to maintain the domestic processing capacity. This reduction in numbers has already negated any short term expansion and is raising concerns about long term viability of some operations particularly in Ontario and Quebec.  Almost 80,000 soweans from Western Canada continue to flow south of the border weekly as well as a few thousand market hogs as the anticipated impacts of COOL (Country of Origin Labeling) in the USA have not materialized as originally feared.

The herd reduction south of the border, though not as drastic as here in Canada, as well as the recent announcements of Russia and China to restart buying of North American pork, and the fading of the influence of the H1N1 virus have all contributed to renewed hope amongst the producers that remain in the industry. They are hoping that in the short term, and even more so the futures markets, will  respond accordingly to reduced supply and increased demand.

During the downturn the Canadian Pork Council turned its attention to the task of reshaping the industry for a more sustainable production environment. That has included  recapturing the over 35% of the domestic market that has been lost to imports, seeking new export markets to reduce the dependency on the USA (currently our largest trading partner), and the resurgence of the Canadian dollar.  These efforts, as well as those of working with the Federal government to revitalize the BRM (Business Risk Management) programs that with the passing of time have lost their usefulness to the livestock industry, all provide an industry focus that will hopefully provide sustainability to the hog industry moving forward.

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