Shirley Voldeng isn’t losing money on hogs, which makes her a rare exception on the Prairies right now.
But her good fortune isn’t due to managerial or production brilliance. She cleared out her barn last year and the new herd hasn’t yet produced market hogs.
When it does, she dreads what the price will be.
“I’m hoping it’s a lot better than now,” said Voldeng, who farms at Naicam, Sask.
“Right now I’m not making any money, but I could have been losing a lot.”
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Prairie hog producers are deep in the red, with average losses on market hogs of $50 per pig. Hog marketers say that $100 per market hog is a good, average price today, while hog production costs average $150 per pig.
The main culprit is the increased value of the dollar. The fourth quarter of every calendar year tends to be a slump time for hog prices and it can be especially bad at the end of the traditional four year hog cycle. That four-year slump appears to be occurring now.
The price downturn is no big worry for American producers, who have made good profits for the past few years.
But in Canada, the situation is starkly different. The almost 40 percent appreciation of the Canadian dollar in the past few years, especially the sudden run-up of the past year, has hurt. It’s a situation that terrifies people like Jim Smith, the producer chair of the Western Hog Exchange.
“You can buy a market hog in Alberta for the same price as a carton of cigarettes,” said Smith.
“There are big losses being racked up.”
Alberta producers are wrestling with a much-reduced price from Olymel in Red Deer, Saskatchewan producers are grappling with the closing of their province’s only large slaughter plant and Manitoba producers find the U.S. weanling market unprofitable and uninterested.
Smith thinks some farmers will give up on the industry if Canadian hog and pig prices don’t recover soon.
“A lot might have left come spring,” he said.
Don Hrapchak, manager of Saskatchewan’s SPI Marketing, said some farmers will try to absorb the losses and won’t change much.
Others will temporarily shut down their barns and return when the slump is over.
Others may just throw in the towel. How many do this depends on how long prices stay low.
“We will see people exit the industry,” said Hrapchak. “Some will come back. Some will not.”
Smith sees little blue sky beyond the storm. The Canadian dollar seems strong and feed grain prices show no sign of weakening.
“How long is the ethanol business in the U.S. going to swallow up any excess corn that exists?” said Smith.
Voldeng said small farmers, in particular, might leave the industry because they can’t ship full loads of hogs to market and don’t get the best prices from packers.
“It’s making it a lot harder to keep going and to keep saying ‘I’m going to keep at it,’ ” said Voldeng.
“People are thinking about just not doing it any longer.”
Jurgen Preugschas, a Mayerthorpe farmer who is chair of Alberta Pork, said producers feel like they’re being torn apart by plunging hog prices and increasing input prices.
“Things haven’t balanced out,” said Preugschas.
“Our inputs haven’t come down in price like they should have. Our income has come down fast, but our inputs stay the same.”
It’s a squeeze that is undermining a lot of families’ commitment to staying in hog farming.
“My wife keeps asking me: Why are we doing this? And she’s not the only one,” said Preugschas.
