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.

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.

Hog futures for 2010 were starting to rise, cash markets were moving upward and the North American inventory numbers were showing signs of a decline, especially in Canada. As of January 20, 2010, the Hog Farm Transition Program had seen three auctions held to remove capacity from the Canadian industry. In total, 338 successful bids worth over $61 million had removed over 104,000 sows, or over 7%, from the national breeding herd.

A final auction to disburse the remainder of the funds from the $75 million program will be held on March 10, 2010. Any producers who submitted successful bids must clean out their barns within a specified period of time and are not permitted to restock for a minimum of three years.

The Quebec government has also announced forthcoming changes to ASRA as it applies to hogs. They will be capping payments at 7 million hogs per year and the payments will only apply to animals born within the province of Quebec. With processing capacity currently at 8 million head per year, the Quebec industry will be short 20,000 hogs per week by early 2011. This, combined with forecasted shortage processing capacity in Ontario by June, leaves at least eastern Canada in a situation of packers competing for an inadequate supply of raw material.

Here in Atlantic Canada, Larsen Packers in Berwick has been supplementing its production with hogs from outside the region. With this window of opportunity closing, they have sent a communication to all producers in the Maritimes with details of a contract in an attempt to secure their requirements moving forward. The company needs a minimum of 1,500 head per week for them to be able to justify the offer. Tony’s Meats in Antigonish N.S., as well as O. H Armstrong in Kingston N.S., are also competing for a limited regional supply.

Work continues at a snail’s pace on a Maritime Red Meat Strategy, including a regional grain program and policy. The
stumbling block to-date has been uniting the agendas of the industry sectors and governments of the three Maritime Provinces. A meeting with the stakeholders in November only seemed to prove this point. It will be a monumental task bringing the federal government onside without a higher level of unity.

The loss of local markets for feed stock would severely handcuff the ability to continue environmentally sustainable crop rotations. The disappearance of livestock manure would increase the need of chemical fertilizers and increase the potential for soil run-off, due to the loss of organic matter from both waste and feed grain plow down.

Where is the hog industry headed? The Maritime region is in a more perilous situation than the rest of Canada. They are struggling to maintain processing capacity due to a significant loss of supply.

Over half of the provincial herd disappeared as a result of the recent national Cull Breeding Swine Program. Nova Scotia lost virtually all its market hog production, compared to peak production earlier this decade. This leaves P.E.I. as the major supplier of market hogs to Nova Scotia packinghouses, with Larsen Packers having to go outside the region to source animals.

A recent announcement by the federal government that is providing funding for more producers to exit the industry is not good news for the Maritimes. The larger producing central and western provinces, who previously exported most of their live hogs south of the border, need to cut back significantly if the industry is to survive. Unfortunately, this national initiative is basically a regional program designed for the west. Ultimately, it could finish the ability of the Maritimes to continue to produce pork locally.

Atlantic Canada is not self sufficient in pork or beef. The inevitability of escalating transportation costs lends itself to a trend of reverse globalization, and the potential of the region being unable to feed itself. If we do not act now to save our resource base and infrastructure, we may be saddled with a financially insurmountable task of trying to rebuild it in a few years time.

Discussions began in October of 2008 towards developing a regional approach for the red meat industry. A series of meetings were held with federal and provincial officials leading to the creation of the Maritime Feed Grain & Red Meat Working Group in April.

Since that time, work has been done to develop strategies for cattle producers in each of the Maritime provinces. A similar document is now being compiled for the pork industry. It is expected this group will reconvene this fall to begin the process of bringing each of the strategies together into a regional plan.

That document will provide the parameters for a pilot project designed to sustain the red meat sectors, until a long term plan can be implemented. The goal is to provide resilience and sustainability to not only the grains and red meat production, but ultimately the broader agriculture industry. It’s about acting as a Maritime community, value adding and buying locally on a commercial scale.