Hog Industry Update

The hog industry continues to lose equity, but slight indications a reversal of the trend could be in the works started to materialize last fall.

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.

Hog Industry Developing Regional Approach

The demise of the red meat sector would have far reaching implications for Island agriculture and, by extension, the provincial economy.

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.