Hog prices keep hog farmers looking over their collective shoulders somewhat with record highs a few short weeks ago, and now slipping a little lower.
Rolf Penner of Morris, a hog and grain farmer says the corn prices touching on $3 dollars a bushel make for a healthy profit on his pigs, especially the last batch he sold. While the batch before that, made money for him too, but not much.
“Maybe this is the year the hogs finally help out the grain sector for me,” said Penner. “Something that hasn’t happened in a long time.”
He does remember when though, knowing full well how the pigs bailed out the grain sector to keep him going through those difficult grain times. That’s why he could justify the fact the grain side kept bleeding to the hog side over the last three to five years.
On a broader scheme of things, Mark Ferguson, manager of industry and policy analysis with Sask Pork expects the current strong market for live hogs to fuel renewed interest in building new feeder barns in Saskatchewan. North American pork producers saw record live hog prices this summer fueled primarily by reduced production in the U.S. due to PED virus and much lower feed prices.
Although Russia’s ban on a range of food imports from Canada, the U.S., the European Union, Australia and Norway including pork is pressuring prices, markets remain strong.
Ferguson says, while everybody’s cost of production is a little different, profitability is currently running somewhere between $70 and $90 a hog and for the entire year closer to $50 a hog.
“Despite the profitability in the industry Canadian slaughter plants are operating below maximum capacity so they require more market hog production to fill those plants,” he says. “We would expect to see more interest in investing in the industry again and building feeder barns if this level of profitability continues and we sure hope it does. We’re going to have to keep an eye on the PED virus in the U.S.”
The PED virus is keeping the prices high because the number of hogs slaughtered in North America is down so much from last year and total production is down so, depending on how that virus affects the industry this winter, that will have a big impact on prices.
While Saskatchewan is a place where the industry can expand, to some extent they will do so off the back of the pig expansion ban in Manitoba.
Florian Possberg, the chair of Sask Pork says the moratorium on new hog barn construction or expansion in Manitoba makes Saskatchewan the logical choice for expansion of western Canada’s swine herd.
Bill 46, passed in Manitoba in 2011, extended a 2008 moratorium on new hog barn construction or expansion in eastern Manitoba to the entire province.
Possberg says in western Canada there is excess hog slaughter capacity right now and interest among the processors in filling that capacity.
“What we’ve heard from Manitoba processors is that, number one, they would like to see expansion in Manitoba but their moratorium on hog expansion really did reduce the appetite there and make it impractical for any new barns,” he says. “There’s certain restrictions on how you handle the byproduct, the manure. In some cases they’re asking for very high cost digesters that have questionable track records whether they’re effective or not.”
Possberg says if farmers can’t produce new hogs in Manitoba, processors can’t go to northern Ontario, so Saskatchewan is really the logical place to expand production.
“At this point there’s still not a real appetite from producers to make the major commitments but obviously if profitability continues that will grow,” he adds.
Possberg also says the U.S. midwest, the most significant hog production area in North America, is experiencing some real health problems.
“We have a health advantage in the prairies, we have space, we have cropland that could utilize the manure for sustainable organic fertilizer and we have a significant supply of wheat, barley, peas and canola meal that go into feeding hogs,” he said. •
— By Harry Siemens