The struggle to compete

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.”

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