Dairy, hog sectors suffer hits

The dairy industry has rebounded from economic shutdown in early stages of the pandemic while the hog industry continues to struggle with low prices and logistics issues

Two of Canada’s livestock industries got savaged in the first COVID-19 lockdowns and outbreaks, but both have stabilized and one is recovering.

Rather than the disasters that ravaged both the dairy and hog industries in spring, the two production systems have fallen out of the national news.

“There’s a lot more confidence in the industry that we can do this, we can handle this,” said David Wiens, a southern Manitoba dairy producer and vice-chair of Dairy Farmers of Canada.

Hog producers are still suffering with low prices and undependable delivery schedules, but they’re coping.

There have been few incidents like the early reports this summer of dairy processors and farmers having to dump milk, and hog farmers having to euthanize piglets and hogs when slaughter plants faced shutdowns and slowdowns.

Those stories were often at the top of news websites. Many worried that large processing plants would face insurmountable challenges in attempting to cope with the impact of COVID-19 on their workforces.

Some hog slaughter plants in Eastern Canada experienced shutdowns and serious slowdowns as the pandemic spread through their workers, mostly from infections within the communities in which the workers lived.

That backed-up hogs on farms across the country, creating a disaster for many farmers, who did not have the barn space to keep hogs beyond their planned dates of shipping. Some market hogs and many weanlings were euthanized. Farmers saw months of careful husbandry destroyed, something that caused grave distress to many farmers and barn workers.

“Producers and the industry are doing what they can to manage the situation,” said Gary Stordy of the Canadian Pork Council.

Some dairy producers faced a similar destruction of their main product, having to dump milk when plants had to scale back production after market demand suddenly shifted.

Processors also dumped milk when they found they had to switch production to different products, causing temporary slowing of overall production, and throwing their raw milk needs out of kilter.

“There was a sudden, rapid fluctuation in the demand for milk,” said Wiens.

At first, most major processors could take all the milk they could ship, as consumers filled fridges and pantries in fear of food shortages.

“We thought ‘Wow, we can’t produce enough milk here.’”

But soon that reversed, with the plant down-times and product shifts causing a slump in the amount of raw milk needed. While people at grocery stores were stocking up on milk and grocery store cheese, the collapse of the hotel, restaurant and institutional industries led to a collapse in demand for many products designed specifically for those buyers.

“We drastically put the brakes on, sent the signals to the farmers to reduce production, because there was simply no home for the milk,” said Wiens.

What does a farmer do to cut production from a dairy cow herd? That’s no easy task. You can’t just stop milking a dairy cow.

Some farmers changed cow diets so that each cow would naturally produce less milk.

Some transitioned a few cows out of milk production earlier than planned. And some shipped cows they had planned to milk for a few more months to slaughter.

That helped fix the supply side of the economic balance, providing less milk to processors so they wouldn’t have to deal with a glut.

The co-ordination allowed by supply management also helped to evenly spread out the pain, Wiens said.

Soon enough, the processors adjusted their production to fit the new demands, then began facing another problem: not enough milk.

Consumers had switched their eating and drinking away from restaurants, food courts, bars and cafeterias and had begun buying a diverse range of foods for eating and cooking at home.

That saw a surge in some products, which caused grocery stores to boost purchases, which caused the processors to request more milk from farmers.

That hasn’t been easy to supply.

“Once you’ve done all the (steps to reduce milk production,) it’s not that easy the next month to flip the switch and you’re back where you were,” said Wiens. “To increase production is a gradual process.”

Farmers had to transition carefully back to the old diets, had to bring more cows into milking and to add new cows to their herds.

That has seen the dairy industry recover much of the demand it lost in the first lockdowns and head into 2021 feeling that its underlying business is good.

“We’re sending the signal to increase production. We need the milk,” said Wiens.

Hog farmers faced a double-whammy at the beginning of the pandemic, with many unable to ship their hogs and facing collapsing prices for those they could manage to sell. A number of American plants saw their ability to operate compromised for a few weeks and that caused an industry-wide backlog.

That situation devastated many producers’ finances and have led to calls for federal government aid, a redesigned pricing system, and even a return to “orderly marketing” monopoly powers for provincial hog farmers.

The problem was alleviated to a small degree by most processors beginning to pay premiums above open market prices, which reflected the glut of market-weight hogs and had fallen far beneath cost-of-production.

Hog futures have also staged an impressive comeback from March-April lows, offering many farmers a way to survive if those futures prices are reflected in the contract and cash market prices they receive.

Demand is strong as both domestic consumers and China prioritize food purchases during COVID-19.

Still, many independent producers are just hanging on.

“There’s fatigue in the industry, especially for some of our independent producers,” said Gary Stordy of the Canadian Pork Council, who has been lobbying the federal government for improvements to AgriStability.

“There’s an important group of producers who have borne the brunt of this.”

Some of the bigger production systems and networks have fared better.

With the anniversary of the pandemic’s arrival in North America coming soon, both the hog and dairy industries have survived, although the damage to some operations will be hard to fix.

One thing that helped keep up dairy farmers’ spirits in the darkest days, according to Wiens, was being able to save some dairy production that farmers feared would be poured down the drain.

The industry donated an extra $10 million in dairy products to Canada’s food banks. That kept many farmers focused on the wholesomeness of their product, even if they weren’t seeing a financial return for it.

“This gave another outlet,” said Wiens.

“The pain of seeing your product poured down the drain is different.”

While most hog operations will survive the pandemic if it doesn’t get worse, not all will.

“Some producers are deciding to move on,” Stordy said.

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