With bovine spongiform encephalopathy grabbing headlines again, the hog industry hopes government officials and consumers don’t overlook its woes.
“We have sort of fallen below the radar (screen) because of the BSE incident,” said John Patience, president of the Prairie Swine Centre.
Dismal hog prices, the rising Canadian dollar and increased domestic consumption of beef at the expense of pork during Canada’s BSE crisis have put the industry in a tailspin.
“The pork industry has gone through an unprecedented period of low prices and negative margins,” said Patience.
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The problem has been exacerbated by the indirect impact of the cattle industry’s BSE crisis, such as changes in feed regulations. Companies like Maple Leaf Pork no longer accept hogs that have been fed meat and bone meal, which has made animals more expensive to raise.
The financial pressure is taking its toll. Some processors have closed and a 1,200 sow, southern Saskatchewan hog operation filed for bankruptcy Nov. 4.
Retired Saskatchewan hog farmer John Keen said the failure of Birsay Livestock Ltd. partnership should be an eye-opener.
“It was well run, well managed and still tanked,” he said.
If a company that had most of its capital borrowed at low interest rates couldn’t survive the downturn in hog prices, more operations are in trouble, said Keen, who got out of pig farming in 1997, but still follows the industry.
“There’s a great many walking dead men out there,” he said.
“We can look for that old domino effect because we’re trying to produce 30 million pigs in a country that only eats 11 million.”
Janet Honey, Manitoba Agriculture’s manager of market analysis and statistics, has heard rumours that seven Manitoba hog operations, including one sizable one, are in financial difficulty.
“We hear stories but we don’t know if it’s seven producers or 200. We really have no idea of the magnitude of people that could be in trouble.”
She said while there is always talk of some companies in over their heads, there is no doubt lenders are taking a closer look at their hog loans these days.
“Certainly I think that bankers are a little more worried now than they were even in fall of 1998 when prices were particularly low.”
Producers eroded their equity when hog prices tanked in 1998 and never fully recovered from that. And now they’ve had two consecutive years of further devastation, so bankers are keeping a watchful eye on the industry, said Honey.
Jacquie Gibney, director of Saskatchewan Agriculture’s livestock development branch, said if prices remain below the cost of production much longer there will be further closures.
And unlike the BSE crisis, there’s not much governments can do to help the hog industry because direct subsidies would likely trigger border duties by the United States.
“It makes it very difficult for government to come in with direct payments or cash for the industry because it will in fact just do them further harm,” said Gibney.
