EDMONTON – Just like Canadian hog producers, Danish hog producers don’t make money selling hogs.
Danish hog producers make their money selling pork, said Karl Christian Moller, chief analyst with Danish Crown, one of the world’s largest pork producers.
Danish Crown, a Danish hog co-operative with $8.6 billion in sales, has bought slaughterhouses around the world as a way to sell Danish hogs and keep its farmers profitable.
Once a hog slaughtering business itself, Danish Crown has expanded to include further processing plants. More than 90 percent of the 21 million hogs raised in Denmark are exported around the world.
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If Canadian hog producers are going to survive in the cutthroat world of pork exports, they must do more than raise hogs, said Moller.
“We would be in exactly the same situation if we were just producing pigs.”
Danish Crown buys hogs at market price. The hogs are slaughtered and sent around the world for further processing or pieces are sold to the highest market. Profits from the further processing company are paid back to the farmer shareholders each year.
Danish Crown has been creative about finding ways into restricted markets. It recently bought a packing plant in Sweden as a way to bypass tough Swedish import laws. It opened an organic food division in an attempt to capture part of that growing market. Organic pork sells for about three times the price of conventional pork and costs only twice as much to produce.
“Right now they are making a lot of money,” Moller said.
Danish Crown also developed breeds of hogs to sell into specific markets. A unique breed is raised just for sales to the British retail chain Marks and Spencer.
“It’s important for you to find more and interesting markets if you want to get paid more money,” said Moller.
Canadian hog producers are thinking of producing pork and not beyond to what consumers want, he said.
Herman Simons, chair of Alberta Pork, doesn’t know if the Danish Crown model will help save the Canadian hog industry, but it’s obvious changes need to be made if producers are to survive.
“Whether that is a form we as Canadians can adopt, it certainly helped their industry,” said Simons.
“If you look around, branding and integration seem to be key for the future.”
Alberta Pork hired consultants Jerry Bouma and Larry Martin to find a plan to make Alberta pork producers profitable. Their plan will call on experts from outside agriculture to identify options for producers.
Former Alberta Pork chair Jurgen Preugschas said producers must do more than raise pigs.
“It’s important we put a plan in place to make our industry sustainable,” said Preugschas.
Sid Postma, a hog producer from Breton, Alta., said the consultants should also look at creating a supply management system for hogs. When he looks at his farmer neighbours, only those in supply managed industries like dairy and chickens make money.
“I want you to think about it. It may be a long-term option, but I don’t want us to stick our head in the sand,” Postma told Preugschas, who gave a presentation on why supply management wouldn’t work because it would force many hog producers out of business.
Postma said creating a supply management system has become a serious topic among hog producers who often lose money.
“It’s a real possibility. It takes care of some of the many underlying problems.”
