Canada’s pork producers get an A plus when it comes to expanding the industry, reducing production costs and supplying high-quality pork to domestic and international markets, said speakers at an industry meeting in Rosetown, Sask., last week.
However, the industry deserves a failing grade when it comes to managing supplies and ensuring that Canadian pork products have a stable market.
Joe Kleinsasser, chair of the Saskatchewan Pork Development Board, said industry leaders got caught up in expanding the industry but failed to ensure that a larger, more productive Canadian hog sector would have stable markets for its products.
Kleinsasser dismissed supply management as a realistic option for the Canadian hog sector but said the industry must regulate its production more carefully to ensure that markets are not flooded with undervalued pork.
“When the topic (of oversupply) was raised five, six, seven years ago with industry leaders … it was dismissed as irrelevant,” Kleinsasser said.
“(Industry leaders) felt we would always be able to sell what we produce because we have such a great product.
“They were right. We do have a great product, but we forgot the most basic law of economics, which is the law of supply and demand. No matter how good you are at producing a product, if you can’t sell it at a profit, it does you no good.”
There is light at the end of the tunnel for the Canadian pork industry, but before producers see any improvement in prices North American consumers must eat their way through a massive stockpile of pork that has flooded the marketplace.
Brad Marceniuk, a livestock economist with Saskatchewan Agriculture, says North American pork stocks are at unusually high levels and U.S. hog inventories are only beginning to retract.
Between 2004 and 2007, U.S. pork in cold storage has averaged about 465 million pounds, he said.
Entering 2009, U.S. inventories were well above 600 million pounds.
Canadian producers have done their part to reduce North American production, Marceniuk added.
During the past four years, market hog inventories in Canada have fallen 21 percent, declining to 10.7 million in 2009 from about 13.5 million four years earlier.
Canadian sow and bred gilt inventories have also fallen sharply, dropping to 1.36 million in June 2009 from about 1.6 million four years earlier, a reduction of nearly 13 percent.
By comparison, U.S. inventories have fallen only marginally during the past three years.
Kleinsasser said a relatively weak American currency delayed industry retraction in the United States.
“American producers were isolated from the hurt for a year or a year and a half longer than most other parts of the world because of their weak currency,” Kleinsasser said.
Despite recent challenges, Prairie pork producers still have a competitive advantage over producers in other parts of the world, he added.
Western Canada has a large agricultural land base, comparatively low land prices, an established infrastructure, progressive growers and modern production facilities.
“It only makes sense to raise pigs here,” he said.
