August 23, 2012

Canada's hog producers may close down on high feed prices

Due to high feed prices which could make operation costs too expensive, some Canada's hog producers may have to make the tough decision to shut down production.

Drought conditions damaged a lot of feed grain crops in the US Midwest, which caused prices there to rally and the Canadian market followed along.

"Because grain prices continue to be high, hog producers are starting to lose money now," Brad Marceniuk, livestock economist with the Saskatchewan Ministry of Agriculture, said.

"So, as they go into the fourth quarter they'll have to make a decision to either borrow money to keep up or to close their operations down."

Marceniuk said hog prices are typically at their lowest point during the fourth quarter of the year, October-December. The price drop is usually caused by an influx of hogs heading into market and a drop off in demand as barbecue season comes to an end.

But, hog producers aren't alone in feeling the pressure from high feed prices in western Canada. Cattle producers are also being hit fairly hard, Marceniuk said.

"It's affecting feed lot producers because they are feeding barley and corn," Marceniuk said. "But, cow/calf producers are not as affected because they're feeding with pastures and hay right now."