Perry Mohr has a good business situation for a bad reason.
“We’re turning away some new business,” said Mohr, general manager of Manitoba Pork Marketing Co-op (MPMC).
“I could sell far more hogs than we’re selling right now. The problem is finding someone to buy them.”
That’s because the U.S. border is essentially shut to Canadian hogs because of American packer fears about country-of-origin labelling (COOL). John Morell and Co. announced in late September that it would no longer accept Canadian hogs at its plants after April 1, when COOL’s penalties will be strictly enforced.
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That caused a domino effect among American feeder barn operators, who began canceling contracts on Canadian weanling producers. The Canadian weanlings are now stuck in Canada, looking for feeder barns and slaughter space in coming months.
The slaughter hogs that once routinely travelled from southern Manitoba to the slaughter plant in Sioux Falls, South Dakota, are contributing to the immediate problem. That flow has mostly stopped, causing a line-up for packer contracts on the Canadian side.
Mohr said existing MPMC clients are protected by contracts.
“Longtime (clients) have nothing to fear.”
But those suddenly faced with a closed border and no one interested in buying their weanlings, sows or slaughter hogs are finding weak interest from Canadian packers. Manitoba’s packers are running at close to capacity and Alberta’s don’t have much room either.
SPI Marketing manager Don Hrapchak said there’s a little bit of room in Alberta, but it will quickly disappear.
“If you’ve got contracts, that’s good. There’s a bit of space in Red Deer, but that depends on how much you try to ship,” said Hrapchak.
The worst problem in Western Canada is in southern Manitoba, where the industry has developed as an integrated part of a U.S. Midwest pig economy.
In Canada, there is neither enough packer capacity nor feeder barn capacity to handle millions of extra pigs that would normally end up in Iowa and Minnesota.
“There are more hogs than hooks now,” said Mohr. “In order to find hooks, you have to go further.”
Manitoba produced nine million pigs last year. The province has slaughter capacity for five million.
Saskatchewan has also been producing more weanlings for export to the U.S. and those hogs will now have to be fed in Canada, further adding to the demands on already-tight packer capacity.
Mohr said that in the short term Canadian packers are not gaining much advantage from the suddenly shut border because most pigs contracted in Canada are subject to formula pricing related to U.S. markets. But that guarantee doesn’t last forever.
“All of those contracts expire some time in the future,” he said.
