Pork demand fails to keep pace, slowing rebound

CALGARY — An abundance of feed and improved market prices for hogs are a good combination for Alberta producers, but they don’t make things completely rosy, says the Alberta Pork chair.

Frank Novak told the organization’s annual meeting Nov. 14 that the last five years of losses “wiped out the balance sheet,” and it will take about four years of $20 per pig profits to get back to the conditions of 2007.

“The actual reality of the industry today is we are at the point where we are at what we hope is the end of a very long, very ugly period of losses,” Novak said in a later interview.

This year’s bumper crop is expected to reduce feed prices, but those benefits won’t immediately materialize.

“This is all potential future activity,” he said. “The same with the markets. Markets look good but we’re talking about markets in the future, and so none of that cheap grain that people are talking about today is going through pigs that are going to market today.

“The hole that we’ve dug is so deep, it would take several years of consistent profits like we have almost never seen, and certainly not in the last 10 years, to even begin to fill that hole back in. We’re a long ways off from being comfortable.”

Novak said Alberta producers have seen average losses of $16 per pig for the last five years and equity losses of $2,000 for every sow in production.

As well, Canadian producers lost their domestic market as those in the value chain chased exports and tried to emulate the American pork industry. It allowed the Americans to ramp up their efficiency and increase their exports to Canada.

“We were so busy doing other things that we weren’t paying attention, and all the people in our value chain share some responsibility,” said Novak. “Over the last 10 years, I think collectively the value chain has done a very good job of destroying the pork brand, and taking what the rest of the world, outside of North America, knows is the best protein going, and treating it like it’s an also ran and something that you buy when it goes on sale.”

In his report to members, Novak said long-term revenue parity with the United States will be needed for the domestic industry to be sustainable.

However, agrifood consultant and former Maple Leaf executive Ted Bilyea said Canadian producers should aim higher and focus on providing quality pork to lucrative markets.

“If you want to compete and win the game, you’d raise the bar,” said Bilyea.

Canada is in a trade deficit with the U.S. on pork, a switch that occurred in the late 1990s.

“We are becoming even more export dependent, but we are not the same country and we should not be playing by the same concepts.”

Canadian Pork Council vice-chair Rick Bergmann said two-thirds of Canada’s pork is exported, but the U.S. remains the biggest customer.

He assured producers the national body was actively fighting country-of-origin labelling in the U.S., which has cost the industry an estimated half billion dollars a year in live hog exports.

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