Farmers have often justified paying high prices for land with the line: “They ain’t making any more of it.” A more complex form of that argument underlies George Morris Centre hog industry analyst Al Mussell’s optimistic view of the prairie hog and beef industries’ long-term future.
“If you start looking at places that have a capability of grain feeding livestock … there aren’t many,” he said.
Few places in the world have lots of land for grazing and crop production combined with small urban populations, which is the prairie situation.
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A growing world population with a growing hunger for meat will quickly cause the markets to find the few places where there is a lot of grazing land and where there are surplus feedgrains that will allow for much feeding of livestock.
“They’re going to have to buy it from us.”
Both hog and cattle producers have recently suffered long periods of depressed margins and surviving producers are only slowly recovering now that prices have improved.
Few feel confident about a safe, secure and profitable future.
And Mussell admits he doesn’t know how the prairie cattle and hog industries will rearrange themselves to make it from the short term to the medium term to the long term.
But he has few doubts that the Prairies have a rare combination of land assets that will allow livestock industries to flourish in the long run.
Many analysts say the world needs to increase its food production by about 70 percent in the next 40 years in order to meet the demands of the growing population. And Mussell said that the world’s farmers have increased world food production by about that amount in the past 40 years.
But he said that doesn’t mean the next 70 percent will be as easy or even necessarily possible.
“That’s not going to happen again. A lot of (the previous increase) was bringing new acreage into production,” said Mussell.
“Some places now are going to actually have to take land out of production (for environmental reasons).”
For beef production, productive grasslands are limited, which means grass-fed beef industries like those of Brazil can only grow so large if they want to remain grass-fed.
“Once you run out of grass production, your supply is done,” said Mussell.
But if they switch to grass and grain fed, like Canada, then they need to either consume their own domestic grain production or import the grain.
If they import the grain, they become a costly source of beef. If they consume domestic grain, that keeps grain off the world market, driving up costs to other feed importers.
But the Prairies’ abundant pasture and grain land will be competitively advantaged, seldom needing to import feed or forage.
Mussell said hog producers are in the same situation, with abundant feed making their costs world competitive.
They also benefit from the fertilizer value of the manure, which can be used to reduce grain production costs.
“We’ve seen a runup in the price of inputs, particularly fertilizer, so that’s a cushion for us,” said Mussell.
If farmers can get through the short term and immediate term problems that have beset so many, Mussell thinks a profitable longterm hog and cattle industry awaits producers.
“The world’s diet is upgrading and demanding more protein,” said Mussell.
“There is just not a lot of slack supply in the world or productive capacity of red meats.”
