July 30, 2009
Canadian hog farmers forced to sell herds as losses mount
Canada's hog industry faces its biggest crisis in 60 years, forcing many farmers to cut their losses by selling their herds - if they can sell them at all.
The industry is reeling from high feed prices, a buoyant Canadian dollar, smaller exports to the US and a disastrous association with the AH1N1 flu outbreak that has closed some export markets.
Manitoba Pork Council general manager Andrew Dickson said Canada has lost about 1,000 hog farmers, or 11 percent, in the past year, while the sow herd has fallen 13 percent over three years.
Hog operations once worth millions of dollars are now worthless in the banks after years of losses, with farmers now losing about CA$30 for every pig they market.
Chicago Mercantile Exchange August lean hog futures were trading at about 57 cents per pound on Tuesday (Jul 28), down about 25 percent from near-month prices a year ago.
US hog farmers are also losing money for many of the same reasons, but the Canadian industry is also struggling to find markets for live hogs that went to US packers before restrictive country of origin labeling laws changed their buying patterns.
The Canadian dollar is now trading at more than US$0.92, making exports like pork less competitive.
The problems add up to a shrunken industry placing big expectations on a government rescue. The Canadian Pork Council has asked Ottawa to loan farmers at least CA$800 million annually, based on a CA$30 per head payment that recognises weaker prices arising from losing export markets leery of AH1N1 flu, which was discovered in April in a single Canadian herd.
The pork council is also asking the government to help farmers get out of the industry by paying them CA$500 per sow on top of market value in an effort to shrink supply to raise prices.
Farmers could cull an estimated 100,000 to 200,000 sows under the program, said Jurgen Preugschas, president of the pork council, meaning Ottawa's sow top-up could total CA$50 million to CA$100 million.
Preugschas said the result would be an industry that, by design, would shrink 18 percent by 2014 to producing 25.5 million pigs - the largest cull in the industry's history.
US$1 = CA$1.090 (Jul 30)
