Hog sector falls into crisis

Canada’s hog producers are caught in an industry tempest as they are buffeted by violent gusts of unpredictability.

Recent good times have suddenly reversed . with cash market weanlings crashing to near-zero value and market hogs struggling to find room at slaughter plants.

“We are in very unprecedented times,” Canadian Pork Council President Rick Bergmann said in a weekend letter to Canada’s hog farmers.

“Your farms and mine are all feeling the financial pressures (COVID-19) is bringing.”

That pressure has suddenly pushed an already overstretched processing sector beyond its ability to kill all the pigs that farmers need to move. Sporadic shutdowns and slowdowns have affected the speed and capacity of slaughter lines and entire packing plants. After an Olymel shutdown in Quebec, farmers in that province and in Ontario had nowhere to ship their pigs.

At many plants extra precautions are being taken to ensure workers don’t come into contact with or spread coronavirus, but those measures have the impact of slowing down production.

With the hog industry operating in a “just in time” manner and mostly unable to warehouse live pigs, any problem at slaughter plants ends up creating a pile-up of pigs on farm. Most farms are not designed to hold onto market weight hogs because new feeder pigs need the space.

“We don’t want pigs backing up on the farm,” said Andrew Dickson, general manager of Manitoba Pork Council.

Manitoba has Canada’s most significant weanling hog export business with many farmers in the Red River Valley focused on producing piglets for southern Minnesota and Iowa. Those areas are now glutted with hogs, while demand for weanlings has dropped and weanling values on the open market have collapsed.

Most producers have their animals’ value hedged through sales contracts with U.S. buyers, but at times in the past there have been widespread contract breaches and defaults with U.S. buyers when prices fall.

“There’s no spare capacity in the U.S.,” said Dickson about American packers, who were running up against limits before COVID-19 exacerbated the situation.

Manitoba’s two major slaughter plants have not been shut down, and Dickson said they can’t be allowed to go offline. There isn’t spare capacity elsewhere to deal with the eastern Prairies’ millions of hogs.

“We do not have the capacity in Manitoba to close a plant,” said Dickson.

Farmers will need improved support during this crisis, Bergmann said. Current programs aren’t enough.

“You can trust that all of us are impressing upon the government the need for better programming that will help pork producers in these very difficult times,” said Bergmann.

The hog industry is always volatile with a unique sensitivity to supply and demand constraints, plus much greater susceptibility to animal disease problems than cattle or other less-concentrated animal production systems.

The outbreak of African swine fever in China, southeast Asia and now Europe has led to booming demand for pork exports on the world market, raising pork values above where they would normally be, given the glutted North American situation.

But now another disease has knocked everything back in the other direction and farmers are struggling to hang on.

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