Canada hog herd shrinks as outlook brightens

 

 

Canadian hog farmers risk downsizing their herds too quickly, just as higher pork prices look realistic for next year and Asian demand soars.

 

Pork consumption is in long decline in the US and Canada, but Asian demand is rising, said Ted Bilyea, a Toronto agri-food consultant and former executive vice-president of pork processor Maple Leaf Foods.

 

China and India are eating more meat, and Asia has run out of arable land, resulting on greater reliance on imports, Bilyea said.

 

Asian consumption, global economic recovery and declines in livestock production in much of the world should produce higher pork prices in 2011, he said.

 

But it is unknown if Canadian farmers can meet the higher demand, as market conditions have made hog-raising unprofitable and need more focused marketing.

 

Bilyea said the industry must be careful not to over-downsize, or areas in Canada will have plants that do not have enough hogs to process.

 

The downsizing poses even greater risk to US packers, which used to imported Canadian hogs to round out processing supplies, he said. John Morrell, a unit of Smithfield Foods said on January 20 that it would close its hog processing plant in Sioux City, Iowa.

 

High feed costs, a volatile Canadian dollar, the US country of origin labelling law and association with H1N1 flu have hit the Canadian hog industry hard.

 

Since late last year, 335 farms have accepted government money to halt pig production for three years, resulting in a 5.6% reduction of the Canadian herd, not counting farmers who quit without funding.

 

With the downsizing programme, farmers can leave the business in a structured way, said Jurgen Preugschas, president of the Canadian Pork Council.

 

Canadian hog farmers have lost money steadily for four years, leaving them unable to wait for better prices and demand, Preugschas said.

 

A benefit in downsizing is that production will more closely match feed supplies. In parts of eastern Canada, farmers are forced to import corn, Bilyea said.

 

Both Preugschas and Bilyea said that angling for niche markets is the best way forward, not simply mass production.

 

The industry should tailor production toward shipping high-end meats to Japan, South Korea and Europe, Preugschas said.