Bill Alford, General Manager of H@ms Marketing Services, shared his insights on Western Canadian hog farmers’ current trends and challenges. Alford delved into market conditions, regulatory issues, and the impact of recent developments in the industry.
Alford said, “Futures prices for hogs you could book earlier this year were at excellent margin levels, and feed costs had come down quite a bit.”
Margins have been very good for the first half of 2024. However, the futures market has set new contract lows and gone pessimistic, which hasn’t shown up in the cash market yet. “If the futures market’s predictions hold, it will be a pretty tight end of the year.”
Alford highlights the importance of forward contracting. “Fortunately, we had a good percentage of hogs booked on a forward contract when prices were higher. It’s a good way to manage your price risk.”
When asked about the effects of U.S. Proposition 12, Alford said, “None of the processors are purchasing Prop 12 hogs. A small group of producers in Alberta got certified, but the Trochu plant they were using had a catastrophic fire. They’re now looking for another market, possibly shipping directly to California or a U.S. plant, but that has issues with shipping pigs that far.”
The Sunterra Meats facility in Trochu — a town of about 1,100 people roughly 145 kilometres northeast of Calgary — was damaged in a blaze on June 17, affecting about 140 jobs.
Alford also touched on the broader economic context. “Prices for everything, including transport and general goods, haven’t subsided. That’s kind of the new normal.”
Alford provided his perspective on the recent announcements from Maple Leaf Foods.
“You would have read a lot of the news releases. There’s not a lot of detail about the motivations for their decision. But representing independent hog producers, we look for them to be more focused on primary pork processing and procurement.”
This might open up opportunities for reinvestment in their operations, such as Brandon, MB., and procurement programs. All the other significant processors have significantly changed their procurement buying programs in Western Canada.
“Maple Leaf has done a few things but needs to catch up. This might allow them to catch up.”
Alford also raised concerns about Maple Leaf Foods’ emphasis on protein. “The pork side, especially since the pandemic, was carrying the load for Maple Leaf Foods. The plant-based products were a significant drag on them.”
“Our base is mostly Hutterites, and it’s a thorn in their side to see money lost on plant-based products without reinvestment in the animal protein side, specifically pork,” he said.
Looking ahead, Alford sees significant changes on the horizon. “By 2029, loose-farrowing housing will be mandatory. Some producers might not participate due to costs, leading to decreased hog supplies. This decision allows them to be more flexible over the next five years.”
Alford said with new leadership at Maple Leaf Foods, the new CEO comes from Smithfield and might lead the company in a new direction.
“We’ll be looking closely at the future hog and procurement strategies of Maple Leaf or the new company, whatever its name.”
Bill Alford’s insights underscore the challenges and opportunities facing the Western Canadian hog industry. As the market adapts to new regulations and economic pressures, strategic decisions will be crucial for maintaining competitiveness and ensuring a sustainable future for hog farmers. •
— By Harry Siemens