Meat + Poultry - May 2008 - 88

CANADIAN PORK

Hog inventories trend down

more than beef producers, is the three-and-a-half to fiveyear hog-price cycle "Canada and the U.S. are marketing
16,000
about 10 percent more pigs than a year ago," Schlegel says,
Thousands of head
"so there's over-production, which is partly related to the
fact that we have a solution to the circovirus problem in
15,000
Canada and the U.S. solved."
According to Statistics Canada numbers, as of Dec. 31,
2007, the Canadian sow heard had already tumbled from
14,000
its peak of 1.63 million sows to 1.54 million - a loss of
90,000 sows.
"The thing is that the March 31 and June 30 Statscan
13,000
data is going to indicate significant liquidations in this
country. It's really hard to tell how large the reduction
will be," he says.
12,000
Schlegel says there's already concern being expressed
in parts of Canada that the country will lose its infrastructure for raising and processing hogs.
11,000
"There could be a backwards spiral that will affect supply1996
1999
2002
2005
2008 chain partners and communities in rural Canada," he adds.
Schlegel says if he had known what was coming, he
Source: Statistics Canada
wouldn't have made major investments in his own hog operations over the past few years. "The financial pressures
are real," he says. "These kinds of losses I've never seen
Casualty list keeps growing
The list of casualties north of the border is long and growing before and it's requiring a re-investment and at a certain
due to conditions that are mostly beyond the industry's control. point you find that you've already borrowed all the money
In the past, the Canada's hog industry has been able to ride out you can borrow. It's very serious stuff."
low prices, high feed costs and disease outbreaks. But this time
around, the perfect storm north of the border is sinking many
"These kinds of losses I've never
producers and industry observers are not optimistic.
Clare Schlegel, president of the Canadian Pork Council who
seen before, and it's requiring a refarms near Tavistock, Ontario, says Canada's hog and beef
industries, which almost doubled in numbers between 1994
investment and at a certain point you
and 2002, began shrinking in 2003 and 2004 when the U.S.
find that you've already borrowed all
dollar began to weaken vis-à-vis the Canadian dollar.
"We had the impact of the dollar and then in Ontarthe money you can borrow. It's very
io and Quebec, we struggled with major disease issues
in 2005-2006. However, Western Canada was still doing
serious stuff."
quite well. Then last September, we
had three different things all come
together at virtually the same time. Forging ahead
We had the [Canadian] dollar go Ken McEwan, a widely respected livestock specialist with
from 53 cents to 85 cents [compared the Univ. of Guelph, says: "From my perspective, swine
to the U.S. dollar]. Then in October, business models that are based on low-cost oil, grain and
it went from $0.85 to $1.10 and now fertilizer are not likely to be sustainable in the near future.
it's come back to about par with the The demand for corn by the ethanol industry is likely to
continue until a new, improved feedstuff is found. Higher
U.S." he says.
Schlegel
Because Canadian pig prices are a di- feed costs are likely for the short to medium term and will
rect conversion from U.S. dollars, Schlegel says Canadian pro- eventually reduce production of animal proteins leading to
ducers find themselves faced with a loss of between $50 and a new equilibrium with higher pork prices and smaller sup$70 per head. "That was one of the three items of the perfect plies than would have normally occurred otherwise.
storm," he says. "The other is the increase in feed costs that
"Canadian consumption of pork has been relatively stagreally went up dramatically last fall and through the winter... nant the last few years, and with an aging population base this
almost doubling in price."
trend is unlikely to change," he adds. "Therefore, market acThe third item, and one that is affecting hog producers cess to global markets has become increasingly important."
94

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