Pork industry facing disaster
The province’s pork industry is facing a crisis it may not survive, warns an Alberta Pork director who farms near Bentley.
Will Kingma of Kingdom Farms said high feed costs and low prices are squeezing many producers out of business.
“We really are afraid that our industry could be irreparably damaged,” said Kingma, who has a 2,000-sow farrow-to-finish operation.
“We’re actually calling it a disaster.”
Last week, Big Sky Farms of Saskatchewan and Puratone Corp. of Manitoba — two of Canada’s biggest hog producers — filed for bankruptcy protection. There have also been casualties in Alberta, said Kingma, where some producers are selling their breeding stock.
“I think I could comfortably say that there will be 15,000 sows or more leaving the industry in Alberta, because of the hardship of the feed costs.
“That number is probably going to be significantly larger.”
Those are sows the industry can ill afford to lose, said Don Brookbank, Olymel’s vice-president of procurement for Western Canada. The Alberta herd had already shrunk from a high of more than 200,000 sows to 135,000 as of July, he pointed out.
“That’s a significant reduction, when you consider that feeds through to the market pigs.
“We’re certainly concerned.”
The problem stems from drought conditions in the United States and Central Canada, which has resulted in crop failures and high feed prices. Meanwhile, pig prices have been moving in the opposite direction — dropping about 25 per cent since the end of June, said Chris Panter, a livestock market analyst with Alberta Agriculture and Rural Development.
Panter attributes this slide to a sell-off of sows in the United States, where producers are also being hammered by high feed costs. That’s boosted the supply of pork in North America and pushed prices down.
Brookbank doesn’t think sows are the problem, pointing out that those animals go into a different meat market than do market pigs. But there has been a big year-over-year increase in the number of market hogs sold in the U.S., likely because producers can’t afford to keep them.
“They’re moving them through as quickly as possible to avoid that high feed cost.”
Regardless, the combination of high input costs and low selling prices is squeezing the life out of Alberta’s pork industry, said Kingma. He estimates that producers here will lose $50 to $70 per pig.
“Our industry actually is, I think, in jeopardy of complete collapse. It’s a pretty sensitive situation we’re in.”
The ripple effect would be significant, added Kingma, with packing plants, feed mills, breeding companies and veterinarians all affected. And once the industry’s infrastructure and reputation is gone, there’s no return.
“Once we lose that, you’re not building that back up again.”
Brookbank remains optimistic, noting that years of adversity has made the industry very resilient.
Keystone Agricultural Producers, a Manitoba farm group, is calling for $130 million in government loan guarantees to help producers. Federal Agriculture Minister Gerry Ritz said his government is monitoring the situation and investigating available options under existing programs.
Kingma said producers just need temporary help to get them through the current crisis. Long term, with the North American herd declining in size, the supply-demand balance should shift in their favour.
“If we can get though this six to eight months, we should see tremendous prices,” he said.
“The game is to get there, but unfortunately there’s going to be a lot of producers not making it though this.”
Alberta’s beef industry is also being hurt by the high feed costs, said Doug Sawyer, chair of the Alberta Beef Producers. Feedlots have been hit the hardest, he said, with shrinking margins there affecting what’s being paid for calves.
“Grain prices have a significant impact on our calf prices and our yearling prices going into the feedlot.”
Panter thinks that the feed cost crisis has likely pushed some feedlots into the red.
“That’s probably where the biggest pressure is.”
Sawyer, who farms near Pine Lake, said the situation is frustrating because beef producers were finally enjoying decent returns after a decade of “brutal financial loss.” He believes the high cost of feed is also the result of the biofuel industry drawing crops away from the food chain.
“Here we are, trying to compete against a government subsidized product. We’d be in a tough situation anyway, but that subsidy just magnifies it.”
Brookbank is sympathetic.
“Forty per cent of the corn in the U.S. is now used for ethanol,” he said.
Like Kingma, Sawyer is optimistic about the future, particularly with the American beef cow herd likely to shrink because of the drought.
“Demand is high and our supplies are tight, so we should be able to do all right.”