Canadian hog farmers are taking the biggest hits, but American hog feeders are also in turmoil over the border disruption.
“It’s a very upsetting situation, the whole thing,” said Iowa hog producer Bryan Karwal, who buys Canadian weanlings and feeds pigs for a Manitoba Hutterite colony.
“It’s not a good scenario and I don’t know how you adapt to it.”
Canadian producers who rely on U.S. buyers to take their weanlings or U.S. packers to take their slaughter hogs have been stunned by the abrupt slamming of the door by many former business partners. Some U.S. packers have said they will avoid buying any pigs that come from Canada, even as weanlings.
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That disruption being felt on Canadian farms is also being felt further up the chain in places like Iowa, where farmers feed the pigs and haul them to the packers in question.
Karwal said some of his neighbours need to buy weanlings, but don’t know what to do. They are already losing a lot of money and fear they are going to get squeezed by American weanling producers.
“People want to buy American if they can (to avoid packer rejection), but if more people want them, then the price is going to go up,” said Karwal.
Corn prices haven’t fallen enough to match the fall in pork prices, so farmers can’t afford to pay premium prices for American-born weanlings.
But if they buy Canadian, there’s a big price risk too, even if sold to a packer that says it will probably be willing to buy Canadian-origin pigs.
“Some packers have said that they will kill Canadian pigs, but they may have to do it at a discount,” said Karwal, who has spoken to a number of packers.
“We don’t know what that discount will be. Even if you contract with them, there will be a clause in that contract saying they can discount them if they need to.”
Companies like John Morrell and Co. and Smithfield Foods have said they don’t intend to buy Canadian-origin pigs, but other packers still willing to sign contracts with Canadians are making big demands.
Karwal said the colony whose pigs he feeds are being asked by the packer to sign up 100 percent of their production for 18 months to guarantee shackle space.
“That really cuts all your options,” he said.
Some Iowa pork producers say they’re getting hit from all sides because pork prices are down, ethanol production has kept corn prices higher than they should be, and packers are making it hard for feeders to decide how to fill their barns.
The present uncertainty over country-of-origin labelling is an extra problem.
“Between ethanol and COOL, it’s really hurt the hog industry,” said Karwal.
