The year of the hog
When historians look back at 1997, they might say it was the year the Prairies went hog wild.
In January and February, a battle for market share cost the two major packers in Alberta $3.5 million in extra premiums paid to farmers.
That war suddenly ended when Saskatchewan Wheat Pool announced it was buying a significant chunk of Fletcher’s and would guarantee supply by boosting hog production through direct investments in barns.
Fuel interest
This added to the existing push by other groups and communities across the Prairies rushing to invest in mega hog barns.
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Then hoof-and-mouth disease in Taiwan forced that country to stop exports, opening the door to Canada, the United States and other countries to fill the gap.
Hog prices are expected to hit record highs in the third quarter of 1997.
Agriculture Canada’s policy branch forecasts Alberta’s index 100 hog price for the July-September period will be $207-$213 per 100 kilograms.
The forecast for October-December is $190-$196. But the forecast is for prices to fall in the second half of 1998.
Agriculture Canada thinks the Alberta price will be in the $165-$171 range in the third quarter and $159-$165 in the fourth quarter of 1998.
Supply up, prices down
It says producers around the world will boost production to take advantage of high prices. When that extra supply is ready for slaughter, prices will be pressured down.
Also, the upheaval caused by Taiwan’s departure from the world market will not last forever.
The price projections are based on the assumption of strong export growth. The department expects 1997 pork exports to be 370,000 tonnes, about equal to 1996. But in 1998, it forecasts a 14 percent increase to 421,000 tonnes.
People who have or who are thinking about investing in hog barns should keep in mind that about the time these new facilities start turning out market-ready pigs, the hog market will be on a down swing.
Whether they will still be profitable depends a lot on the price of feed grains. Luckily for hog projects, the forecast is for lower feed grain prices.
The best expectation is not windfall returns but long-term growth, job creation and the development of local markets for feed grains.
