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.