May 29, 2007

Canada's hog production seen to drop as pork industry continues to readjust

Canada's swine production are expected to decline for the next couple of years as Canadian pork processing industry continues to readjust, according to financial services provider Rabobank International.

Rabobank International executive director food and agribusiness research Fiona Boal predicts a slight adjustment downward this year in terms of production and that may continue over the next couple of years amid packing rationalization.

In late 2006, Canada's two largest pork processors, Maple Leaf Foods and Olymel, announced significant restructuring plans in response to deteriorating margins and what was perceived to be declining international competitiveness in the Canadian pork complex.

Boal said the restructuring will take some time to work, thus, some plants are seen to shut down. 

In terms of total output, Boal said there will only be a slight downturn as Canada's export of live pigs to the US and to its neighbouring border states will continue. 

The Rabobank executive said pork industry in Quebec and Ontario will start to contract.  There will also be consolidation in terms of both processing and production assets, she said.

Boal remains hopeful the overall ability of the Canadian industry to slaughter hogs won't actually fall.

She believes one of the keys to the ongoing success of the Canadian pork industry is having a vibrant domestic processing sector and suggests we may see some new entrants in processing down the road.