The Canadian hog herd continues to decline and is likely to shrink further as government programs kick in to get rid of breeding animals.
Alberta Pork Producers vice-president Ben Woolley estimates another 150,000 sows will be culled, and producers who decide to liquidate their herds may not return to the business.
Statistics Canada’s livestock census report for July estimates Canadian hog producers had 12.1 million animals on their farms, down nearly seven percent from the previous year. The Canadian breeding herd, consisting mainly of sows and gilts, declined 4.6 percent to almost 1.4 million head during the last year.
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As sows decrease, so do the number of piglets. Farrowing intentions for the third quarter of 2009 are down more than four percent from the same period last year and are expected to be down 5.5 percent for the fourth quarter.
Hog inventories have been decreasing since 2006, following a period of growth and investment in more efficient barns in the late 1990s and early 2000s, Statistics Canada said.
Factors take toll
Woolley said the industry has suffered a series of blows, and recovery is hurt by a strengthening Canadian dollar, high feed prices and lower demand for pork worldwide.
“The industry was built on a $1.50 exchange rate and when it is on par, it makes it much more difficult to compete in the export market to move product,” he said.
“The producers who built their units with an eye to exporting to the U.S. were certainly affected as well.”
Canada has exported more than one million tonnes of pork a year since 2005. It imported 192,840 tonnes last year, which was up from 168,000 tonnes in 2007.
Pork marketing has been slammed by an international recession, scares over the H1N1 influenza virus and U.S. country-of-origin labelling laws.
The bulk of exports are market hogs shipped to slaughter and weaner hogs shipped for feeding. Hogs exported for slaughter were down 58.5 percent in the first and second quarters of this year, and weaner hog exports fell almost 28 percent from the same period a year ago.
Manitoba, the main exporting province, saw its total hog exports drop by almost one third in the first half of the year compared to the same point last year.
Canadian hog slaughter remains strong this year because more weaners were fed to slaughter weight in Canada rather than exported to American finishing operations. Domestic slaughter capacity increased, mainly in the Prairies. However, revenues from hog sales fell almost three percent in 2008, the fourth consecutive annual decrease.
The average annual weighted price in Ontario, a leading hog price indicator in Canada, remained virtually unchanged in 2008 from the previous year. That was down $29 per hundredweight since its peak of $86 per cwt. in 1996.
Historically, decreases in hog prices generally recover within a year or two, as they did following the price collapse in the fall of 1998. However, current hog prices have not recovered since 2005, Statistics Canada said.
There were 66.1 million pigs in the United States as of June 1, down two percent from a year ago but a one percent increase since March.
The breeding herd, at 5.97 million head, was down three percent from last year and down slightly from the previous quarter. Market hog inventory, at 60.1 million head, was also down slightly, indicating the U.S. is not liquidating despite low market prices.
