to be the producer of low-cost feed supporting a strong, competitive livestock sector.
That premise hasn’t played out for hogs exactly as some thought.
Al Mussell, a researcher at the George Morris Centre in Guelph, Ont., told the recent Manitoba Swine Seminar that Canada doesn’t have a competitive advantage in feed grain.
“This is surprising, particularly given that much of the development of the western Canadian hog industry was developed precisely on an anticipated advantage in hog feeding,” he said.
The problem, as he sees it, is with yield. Yield growth in American corn has surpassed that of feed grain in Western and Eastern Canada, he said.
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“You’ve got a relatively less productive feed grain being used in Canada. At the end of the day it points towards a higher cost of feed here relative to the U.S.”
Mussell said the costs of producing feed are similar whether a crop is grown in southern Manitoba or Iowa. Over time, however, more crop is produced in Iowa.
He suggested the cause is a lack of investment in research to develop higher yielding feed barley.
Don Hrapchak, general manager of SPI Marketing Group in Saskatoon, agrees the feed advantage has shifted but for different reasons.
“U.S. farm policy made the feed advantage move from the eastern part of Saskatchewan to the Midwest United States,” he said, referring to subsidies.
An extremely low corn price compared to barley made it more attractive to finish pigs in the U.S., so more went south, he said.
“We just haven’t been able to keep pace.”
As the ethanol industry consumes more U.S. corn and causes its price
to rise, industry observers think the advantage will return to Canada.
The gap has narrowed. Iowa’s corn prices have risen about 107 percent since last September thanks to booming ethanol demand. Manitoba’s feed grain prices have also risen, but at a slower rate.
Feed wheat prices are about 40 percent higher than what they were last September, while feed barley is
up about 70 percent.
Florian Possberg, chief executive officer of Big Sky Farms, said ethanol is causing U.S. corn prices “to go kind of nutso.”
However, he also said his company feeds hogs from Treherne, Man., to Unity, Sask., and there are cost differences along the way. The company also feeds hogs in Iowa.
“We are feeding a bit cheaper in Saskatchewan than we are in southwest Iowa right now,” he said.
The company could feed a lot more hogs in Saskatchewan.
“It’s not a question of supply,” Possberg said.
“It’s whether it’s profitable. We’re paying twice as much (for feed grain) as we were a year and a half ago.”
Mussell said highly efficient hog producers are sandwiched between a troubled packing sector and a feed grain sector that’s falling behind.
Where Canadian producers excel, however, is in larger litter sizes and number of pigs weaned per sow.
A United States Department of Agriculture analysis showed that on average, Canada’s breeding herd produces 3.4 more pigs per sow per year than the U.S. herd. Also, the Canadian herd produces 0.4 pigs per litter more than the U.S.
Kevin Grier, a market analyst also at the George Morris Centre, said keeping weaners and feeders in Canada could be more difficult if the feed grain advantage shifts further to the U.S.
“It will hurt the industry and encourage exports,” he said.
