December 19, 2003

Effects of Rising Canadian Dollar Offset by Lower Grain Costs for Swine Producers in Canada

Detrimental effects of the strong Canadian dollar were offset by lower grain costs, figures release by the Manitoba Agriculture, Food and Rural Initiatives showed.

The Market Analysis and Statistics Branch developed profitability profiles, show that swine producers who mix their own feed remained profitable until October of this year.

Branch Manager Janet Honey says lower grain costs helped offset the impact of the rising dollar.

"The farrow to finish sector did average positive returns. The finishing sector averaged positive returns but certainly a lot smaller than the farrow to finish.

The weanling sector averaged even lower returns. Having said that, all returns were positive up until October.

Since then, prices have slipped. Swine producers who initially reaped profits during the first ten months may not be gaining now. 

Obviously the increase in the Canadian dollar this year has eaten into hog producers profits quite significantly.

On average for the year the dollar has increased by more than 12% but, in some periods compared to year earlier, the dollar has been up 20%.

When we were looking at the increases in hog prices in the second, third and fourth quarters of this year, we were looking at increases of 20 - 25% over year earlier levels.

That hasn't happened because the higher dollar has meant our prices have been that much lower so profits are a lot lower than they would have been had we had a 60 cent dollar.

Honey says, had the dollar remained at the same level as last year, prices would have been at least 20% higher in some months of 2003.