Hog farmers cut herds for gov't aid in Canada

Canadian hog farmers have committed to slashing their herds by 5.6% in exchange for government aid, but demand for the exit cash is so high that the Canadian Pork Council (CPC) fears the industry may be shrinking too fast.

A competitive bidding process for the funds so far has resulted in 335 farms agreeing to remove 104,531 sows, or 7.9% of the national sow herd, and 660,541 total pigs (5.6% of the Canadian herd) from production.

CPC which administers the programme, reported on Monday (Jan 25) the results of the third of four rounds to distribute the money. Farmers must agree to halt hog production for three years in exchange for the funds.

The process has attracted three times more bids from farmers than it could approve, suggesting that many farmers may be ready to quit without government help.

The Canadian hog industry has suffered through its longest slump in decades as high feed costs and low prices have caused farmers to lose money on each pig they raise. A strong Canadian dollar and US food labeling law have cut deeply into exports, softening demand.

Offering aid to shrink production is an industry attempt to help some producers save their farms and support prices for those staying in business.

CPC president Jurgen Preugschas said the council has set a goal of reducing annual production by 18% to 25.5 million pigs in 2014 from 2008 levels, but it may be moving faster than that.

A separate loans programme delivered by private lenders, but backed by the Canadian government, is not approving loans as quickly as hoped, Preugschas said.

CPC will award the final CA$14 million (US$13 million) of the CA$75 million (US$69 million) government fund on March 10.