Canadian hog producers are using an on-line petition to plead for help from Ottawa, saying their future is dire without immediate support.
“The evidence is clear and within the public forum that the Canadian pork industry needs a federally sponsored emergency funding initiative in order to establish a fiscal bridge,” says the petition, available at www.petitiononline.com/canpork/petition.html.
“I ask you as minister and advocate for our country’s agriculture sector to act immediately, without political or pundit bias, to help our industry in its darkest hour.”
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Leading American analysts agree that the North American industry is probably in the midst of the worst times in decades, and Canadians are suffering more than American producers.
“Unfortunately, there is no end in sight for the string of financial losses plaguing producers,” said Ron Plain of the University of Missouri.
“Before we get through this in the United States, we’re going to end up with larger financial losses for hog producers than we did in 1998-99.”
Plain said Canadian producers are suffering more because the Canadian dollar has gained greatly in value in recent years. This has squeezed hog margins because North American prices are based on U.S. dollar values.
Mandatory country-of-origin labelling, which has just been implemented in the U.S., is also ravaging the Canadian industry.
The new labelling rules discourage American hog feeders from buying Canadian weanlings and discourage packers from buying Canadian slaughter hogs without a discount.
Manitoba’s hog industry has been worst hit because so much of it in the Red River Valley is based on producing weanlings for Midwest U.S. feeders. Producers have lost most of their usual customers and are finding there are not enough feeder barns in Canada to take the excess.
Canadian slaughter hog exporters are scrambling to get their pigs into Canada’s small number of remaining packers.
The forced re-engineering of the Canadian industry is occurring in the midst of a continent-wide downturn.
Plain estimates the current loss-making period, already at 22 months, will extend to 30 months before it ends. That makes the return to profitability in the U.S. likely only in the second quarter of 2010.
“It’s a very, very tough situation,” Plain said.
He calculates breakeven at $52 US per hundredweight live and $66 lean.
The Chicago Mercantile Exchange’s livestock market analysts predict cash market prices this autumn will be below $50 live and $37.50 lean.
They take a more bearish view on hog profitability next year.
“As of today, the only month that can be projected to be profitable between now and the end of 2010 is July and the projected profit is 76 cents per hundredweight carcass or about $1.50 per head,” the CME’s Daily Livestock Report said Aug. 5.
Sows are the only profitable sector, but so far American producers have been slow to liquidate their herds.
