May 12, 2008
 

No respite seen for beleaguered Canadian hog sector

 

 

The Canadian hog industry, already suffering from the double-whammy of high feed costs and country-of-origin legislation impending from its biggest customer, is unlikely to see respite from lower feed prices this year, according to a USDA report released last week.

 

The Canadian hog inventory is expected to fall about another 1.5 million head by the end of 2008 to slightly above 12.0 million head.

 

A smaller western barley crop in 2008 and a lower corn crop in Eastern Canada due to reduced planting intentions means feed cost relief for hog producers are unlikely this year.

 

Meanwhile, producers at a recent Manitoba meeting said that several US pork processors have already indicated they will stop handling Canadian hogs when Country of Origin labeling (COOL) is implemented because of the potential need to segregate Canadian hogs. Other Manitoba producers allege that some US hog finishers, those who feed young hogs to slaughter weight, are canceling contracts with their Manitoba suppliers of weanling pigs.

 

In 2007, Canadian hog producers, mostly from Manitoba and Ontario, exported more than 10 million live hogs, slaughter and feeder, worth more than US$650 million, to US hog feeders and processors. The threat of the loss of the live swine market under COOL is causing strong concern among Canadian hog producers.

 

To add insult to injury, the country would be receiving more pork from the US, thanks to the strong Canadian dollar.  

 

US pork sales to Canada increased 20 percent during 2007 to reach 164,334 tonnes. For 2008, demand for US pork in Canada is expected to increase reflecting the outlook for lower Canadian pork production and a strengthening Canadian dollar.

 

In the January to February period of 2008 official Canadian trade statistics show imports of US pork up 40 percent over the same period last year.

 

In March 2008, responding to calls from the livestock industry for financial assistance by amending the Agricultural Marketing Products Act (AMPA) to give Canadian producers better access to cash advances.

 

The programme now provides Canadian producers access up to C$400,000 (up to C$100,000 interest-free) to help producers with cash flow by giving them the flexibility to keep their products and sell them when market conditions are favorable.

 

Agriculture and Agri-Food Canada (AAFC) also announced a new CAN$50 million initiative with the Canadian Pork Council to deliver a sow cull program that will help restructure the industry. One of the goals being to reduce the sow herd by 10 percent.

 

Canada's hog herd in April was down almost 12 percent from similar levels last year, while the number of hog farms fell 20 percent.