The struggle to compete

Hundreds of new hog barns are built in the U.S. each year, but none in Canada. Why?

Fewer than 10 hog barns have been built in Western Canada over the last several years. Meanwhile, farmers in the U.S. Midwest have constructed hundreds of barns over the same period.

In Minnesota, for example, dozens of new barns are built in the state each year, said David Preisler, executive director of Minnesota Pork.

“If you look at the last five years, it would range from a few dozen (per year) on the low end to 100 to150 on the high end.”

Andrew Dickson, general manager of the Manitoba Pork Council, said farmers in the province have built three or four barns in the last five years, but Iowa regularly constructs 150 barns a year.

Companies on both sides of the border have dealt with challenging conditions recently, including high feed costs, mediocre hog prices and the porcine epidemic diarrhea virus. Despite the impediments, Americans are investing in the future but western Canadian farmers and companies aren’t building new barns.

Why?

Neil Ketilson, general manager of Saskatchewan Pork, said it’s difficult to pin the answer on one factor, but Americans do look at hogs differently.

“In Iowa or places like that, they have a real culture for hog production,” said Ketilson.

“A lot of the farmers down there view the hogs as a fertilizer factory…. They put up a 2,000 or 4,000 head feeder barn to provide fertilizer for their corn.”

Manitoba Pork issued a news release in late May calling attention to the shortage of market hogs in Western Canada. The Maple Leaf Foods processing plant in Brandon is cutting one production day per month from May to September because it can’t get enough hogs to operate at full capacity, the council said.

“This situation will not improve until producers build more barns to produce market hogs,” said chair Karl Kynoch.

Dickson said Manitoba farmers need to produce an additional 1.5 million market hogs per year to fully supply the Maple Leaf plant in Brandon and the Hylife processing plant in Neepawa.

Manitoba produced 4.68 million market hogs last year.

“If we could get up to six million pigs we’d be doing good,” Dickson said.

“That’s the sort of number we need to get to.”

Besides adding barns to increase pig production, Manitoba hog farmers need to invest in new structures, Dickson said.

“In Manitoba we should be building about 20 barns per year, just to replace what we’ve got.”

Manitoba Pork said stringent environmental regulations in the province that require companies and farmers to build an anaerobic digester for new hog barns are killing investment in the industry.

Dickson said it costs $1 million to build a small barn with 2,000 finisher places.

“An anaerobic digester for an operation like that would cost at least $1 million…. Why would you do it?”

Manitoba Pork is working with the province to amend the strict regulations, but even if that is successful, other obstacles are holding back the province’s pork industry, Dickson said.

“We have an issue in terms of lending,” he said.

“If you want to go and build a finisher barn, you’re looking at about $500 per finisher place.”

Dickson said banks will lend only 65 percent of the market value of finisher places, which is estimated at $250 per place.

“The new investor has to fork out two-thirds of the equity. A lot of guys (say), ‘I can’t do that.’ ”

Dickson said the hog sector has a future in Western Canada, in spite of the regulatory and financial challenges,

“There’s a range of people that might come into the industry,” he said.

“Part of it is to diversify their operations, treating it as a supply of nutrients for their crops. This is what they do in Iowa. They look at hog barns as an adjunct to their grain operation.”

Don Flaten, a soil science professor and phosphorus expert with the University of Manitoba, said hog barns have an image problem.

“For many people in Manitoba, they probably don’t have as positive an attitude towards intensive livestock operations as they could and should have,” he said.

“There’s lots of areas of the province where manure nutrients could be applied in balance with the crop removal without any extraordinary investment or technology, such as anaerobic digestion … (and would) benefit agronomically from having access to more manure phosphorus.”

Country-of-origin labelling in the United States has obviously been detrimental to Canadian investment in the hog sector, but the controversial rules don’t explain why Western Canada isn’t producing enough pork to satisfy domestic slaughter plant demand.

Ketilson said American farmers perceive hog barns as an agronomic asset, while many Canadian producers draw a clear line between grain and livestock.

“I don’t think we in Canada value the nutrient base of a hog barn, as much as they do,” he said.

“Traditionally, farmers in Saskatchewan are grain farmers.”

Ketilson said marketing practices are another key difference. American grain and hog producers routinely use futures markets to mitigate the ups and downs of the market, while Canadian farmers do not.

“They will hedge for the grain as well as the hogs … so they lock in a profit,” Ketilson said.

“In Canada, we don’t tend to do that or we don’t do it enough. We’re swinging in the wind all the time. If we get a down market, we haven’t locked in a profit.”

7 Responses

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  1. Too Few Hogs, Too many Processing Plants, or Just No Planning in Manitoba.

    “When Maple Leaf sneezes, Brandon, MB. catches a cold. We need more hogs. 1800 people have light paycheques.” (Brandon Sun,May 28)

    Maybe it’s because of our Canadian dollar ($$) comparison, and Manitoba hog producers are getting a much better price in the US ?

    It seems the Hylife hog plant in Neepawa has no hog shortage problems.

    In 2006, Manitoba had the distinction of being the #1 hog producer in Canada.
    Over 9 million animals….then in 2009 there were too many hogs, and barns were shut down, herds were culled, feed prices were high, and S.Korea no longer imported hogs from Canada, and governments subsidized the industry.Now the complaints are not enough hogs.?
    And in the middle of all this, the taxpayer is footing the promises of government to support and subsidize this industry. What’s Next?

    An economics professor has this to say. “It would have been far less costly
    for taxpayers and certainly more friendly to the water sources, environment and the quality of life to the rural population to pay, yes pay bribe money
    to the hog industry and say a polite, No Thank You, we don’t want your business and we are paying you to stay away.

    It’s clear this corporation,raising hogs as a meat exporting industry, is not economically sustainable without taxpayers cash and environmental subsidies. If the industry can’t succeed within the laws that are supposed to protect the public,our water sources and the environment, and refuse to adapt, then they must be allowed to fail.

    And Robert Arnason, It’s not all that rosy in the United State either, read this; Manitobans
    have very good memories.
    http://www.riverlaw.us/fishkills.html

  2. Yes, Manitobans also know about the heavy phosphorus loading that comes in on the Red River and ends in Lake Winnipeg. No doubt, a nutrient contribution from all the hog barns in Minnesota and Iowa.

    • Paul Overby on

      Better get our your geography book, John. The Red starts in northeastern SD — not even close to Iowa. Or even to most of the MN production. But, yes, handling hog manure is a problem. MB may have swung from too lax to too stringent.

      • It’s close enough Paul. Eventually much of the nutrients will get into the Red River water system, and other water courses, especially during high water flooding in the spring, flowing north. Scientific studies taken at the
        US / Manitoba border have determined that at least 52% of the phosphorus
        loading that enters Lake Winnipeg comes via the Red River.How big is the watershed that drains into Lake Winnipeg?

        The watershed draining to Lake Winnipeg is huge, estimated to be nearly 1 million square km. It extends from near Lake Superior in the east, from west of Banff in the west, and from northern South Dakota in the south. Its drainage is about 40 times larger than its surface, a ratio bigger than any other large lake in the world. It drains large areas of northwestern Ontario, Manitoba, Saskatchewan, Alberta, North Dakota and Minnesota and small areas of Montana and South Dakota. It contains several internal drainage basins, areas that do not normally discharge to the rivers flowing to the lake but can sometimes do so in high-water seasons. Given the massive watershed and the relatively small volume of water in the lake, it is dominated by events in its watershed. It is not surprising to find it showing the effects of materials being added to it as a result of activities in the watershed.

  3. To John,check your geography.
    Mississippi watershed starts about 45 minutes east of Fargo,ND.
    The Missouri watershed covers a lot of North Dakota,which drains into the Mississippi.
    Why not attack the city of Winnipeg,dumping untreated sewage into the red and not informing the authories that there was issues with a sewage treatment plant.
    What about the heavy rains that wash everything off the streets in Winnipeg,including oils,rubbers,garbage etc directly into storm sewers which drain directly into the river.
    No its easier to attack farmers,the people who are asked to feed the world with meats and grain.
    The agriculture industry in the western provinces are the life blood of the area.
    No food you starve.
    Farmers do not waist money,they make capitol investments that turn a profit,and will benefit the land.
    Western Canada is a pretty nice area,pretty roomy.
    I have driven for years through the northern Illinois area,chicago etc and I see prime farm land taken out of production for residential building,which eventually brings factories.
    So you tell me,whats worse,thousands of acres of cement and pavment where rain cannot soak into the earth where it is intended to go,or down some storm drain directly into lakes and rivers unfiltered

  4. NO FOOD, You starve…..Right. No Water to drink and you will die sooner.
    The Red River of the North is about 885 kilometres (550 mi ) long of which 635
    kilometers (395 Mi) are in the United States.
    That 52 % of Phosphorus load coming into Canada …….Wonder where all that is coming from, after all the river only traverses nearly 400 miles, bound to pick up
    something…..along the way, don’t you think? I have never attacked farmers, I grew up on a farm. Industrial factory production of animals …. that is not farming, in my view. I am entitled to that.

    Fear not,City of Winnipeg deserves and has received my words, for what they do.
    Your concerns about prime farmland being expropriated for residential building, I agree. That issue is for the governors, councils, etc. to do a much better job. Have you openly voiced your concerns, to let them know?

  5. In case someone is interested:

    The phosphorus load from the Red River entering Canada calculated and averaged over a 14 year period, 1994-2007 ( at 52%) = 2,798 tonnes per year.

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