January 15, 2007

Low production cost vital for success in Canadian pork industry

Swine producers who are able to maintain a low cost of production have the greatest chance of success or even survival said Claude Bilodeau, a representative from the National Bank of Canada.

Bilodeau is slated to be one of the speakers at the 2007 Banff Pork seminar. Growth in world export markets has decreased and the market is going to get tougher for the Canadian pig industry, he said.

Although Canada pork production represents only two percent of world pork production, it accounted for 22 percent of world pork exports in 2004.

Half the Canadian pork production is exported and because the Canadian consumption of pork is relatively stable, most of the increases seen between 2000 and 2003 were directed toward the export market.

Due to currency fluctuations, Canada has become less competitive on the American and Japanese markets so exporters had to turn to other markets like Australia, Mexico, and mainly Russia last year. Meanwhile, new competitors like Chile has emerged.

Bilodeau said while there is no prescibed strategy for success, the best business plans have tended to emphasize low production costs.

He noted that the top 20 percent of the producers are low cost producers and that strategy has made them successful over the years.