November 10, 2003


Rising Soymeal Prices Negatively Affecting Canada Pork Industry


The increasing cost of soybean meal is negatively affecting the Canadian pork industry and may cause producers to switch to canola meal as a protein source, said sources.


About 15% - 20% of hog rations on farm are composed of soymeal, with approximately four finishing pigs consume every ton of feed. Soymeal prices have gone up by about $100 per ton from a year ago, which translates to a four to five dollar increase in cost for raising each pig, sources said.


The increased feed costs makes producers look at alternate sources of protein, said Marcel Hacault, chairman of the Manitoba Pork Council. While Hacault still had soymeal on his farm, he said he would price out canola meal before buying another load of soymeal.


While canola meal is a viable alternative and may be cheaper, it is also lower in protein and "a little more restrictive in the amount you can feed and in which diets you can feed," said Hacault. He added that there are some palatability issues with canola meals, including increased roughage.


Higher feed costs causes "people in the industry take a very close look at their feeding programs and make sure they have implemented an optimum feeding program," said John Patience, president of the Prairie Swine Centre at the University of Saskatchewan. Feed costs could be lowered substantially, "but if it costs you more in lost revenue due to slower growth rates and poor carcass, then that's not productive," Patience added.


A number of factors will determine the exact impact of the higher soymeal prices, including location, and whether producers are buying prepared feed or making it on farm, said Clair Schlegel, vice-president of the Canadian Pork Council. He added that in some areas of the country, other products are available to substitute when protein costs increase.


"Feed prices are going up, and pig prices have been coming down the last number of weeks," said Schlegel noting that the industry is already operating at an unprofitable level.


"If this is just a blip, then it's part of the market cycle," said Schlegel. However, "if it moves pig pricing to a new level and unless pork prices follow, it would prolong our agony and maybe ultimately make us uncompetitive."


"We had profitable months for pig production, depending on the farm, in July, August and September," said Patience, "Then the price of pigs declined and the price of feed went up."


Six weeks ago, the price of pigs was close to C$1.30 per kilogram, but now it is closer to C$1.00 per kilogram. Which translates to a loss of C$30 to C$35 per pig lost on the revenue side, added to the four to five dollars per pig increase in feed cost, "so the impact is huge," said Patience.


A stronger Canadian dollar and increased demand for beef following Canada's BSE crisis were both reasons given for the lower pig prices.


Tempering the losses resulting from higher soymeal costs is a decrease in feed grain prices. "When the cereals went down it was positive, but soymeal took a corresponding jump and offset the difference... so costs are pretty much the same," said Neil Ketilson, general manager of Sask Pork.


Prices for feed grains have gone down by $10 to $12 per pig, "so we just gave half of that away to soybean meal," said Patience.

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