LEDUC, Alta. – As Alberta pork producers try to find the will to stay in business another year, their export achievements are laudable.
“All of the evidence we are gathering is that the future is bright for food producers globally,” said John Knapp, deputy minister of agriculture.
However, producers at Alberta Pork’s annual meeting in Leduc said they have seen few gains from the offshore success, where Japan is one of the primary customers.
Canadian and U.S. pork consumption is down five percent, barley and feed wheat prices are going up and the 2010 breeding inventory is at its lowest level in decades.
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“The packers better look at that if there are fewer hogs to process,” said Gordon Cove of the Alberta Livestock and Meat Agency.
Producers are expected to continue liquidating their herds in 2011 and after nine years of hog reduction in Alberta, the situation for producers is severe, even if Canadian pork exports are up 3.7 percent.
Market analyst Ron Gietz had the numbers to prove the dire market situation, showing how producer margins have sunk every year since 2007.
There is some hope for improved pork prices because there will be fewer slaughter hogs available.
While corn prices are trending upward to $5.35 per bushel, Alberta may be cushioned because there is a large barley crop and plenty of feed wheat available.
Alberta feed costs may net out lower than U.S. corn, but prices will still be higher than last year.
Gietz also anticipates 2011 will be a yellow year, in which canola is planted on every available acre across the Prairies.
On the economic side, the Canadian dollar will continue to be strong against the U.S. greenback.
“We are through the volatile part of it. We are in a new reality with a 95 to par dollar,” he said.
As for future prices, he suggested the 2011 Alberta price could be around $1.42 per kilogram on a 100 index hog.
If the U.S. price drops from $73 per hundredweight and the dollar is at par, the average price will be $1.32 per kg in Canada.
If the U.S. price goes to $85 and the loonie is at 95 cents, prices could improve to 1.55 per kg, a dime higher than the cost of production.
Still, exports remain a bright spot, said Michael Young of Canadian Pork International, the industry export promotion agency.
Market access defines who is among the elite group of pork exporters in the world. Canada, the U.S. and Denmark are members of that group.
Last year Canada marketed 30 million pigs in an environment where exports have improved year by year since 1989.
Canada exports 60 percent of its production and is trading into about 100 markets, selling more than one million tonnes worth $2.6 billion.
Moore anticipates 2010 will be a record year for exports with the main customers being Japan, the U.S. and Mexico followed by Russia, South Korea, China/Taiwan and Australia.
Japan is the most lucrative pork market in the world and Canada has had a presence there for 40 years. Alberta Pork has been selling there for 30 years, earning $327 million in sales last year.
A large percentage of Alberta sales are in chilled pork, which is considered a higher value product.
“They appreciate our product, the fine texture, the marbling and the firmness,” Young said.
“They have applications for our products that go beyond pork chops and roasts.”
The Japanese like shabu-shabu, using extra thin slices of meat that are quickly boiled, and jowl meat, another thinly sliced product.
“There are pieces of the pigs we have totally forgotten about.”
Besides offering a barley fed product that influences meat quality by creating hard fat and firm, well coloured meat, Alberta has a good reputation for farming in a clean environment.
Another advantage is proximity. Pork shipments from Western
Canada can reach Japan two days sooner than shipments from other ports in the western hemisphere. This contributes to the Japanese demand for a 45-day shelf life.
