DES MOINES, Iowa – Jim Donaldson and Richard Stein weren’t surprised that the pace was less hectic at this year’s World Pork Expo in Des Moines.
The two Canadian purebred swine exporters, who have been attending the show for at least 30 years, weren’t as busy as they normally are as they sat in their booth, greeting long-time customers and trying to attract new ones.
For Stein, who farms nears near Tavistock, Ont., it’s a natural consequence of the financial beating hog producers are taking in Canada and the United States.
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“At some point there will be a price to pay for this,” he said.
Donaldson, also from Tavistock, agreed.
“I don’t think North Americans understand how good they’ve got it …. We have a real cheap food policy and I don’t think anyone realizes how well served by our farmers.”
A host of problems is draining the health and confidence from the North American hog industry. Meat prices have not risen enough in the past two years to offset the leap in feed grain prices, leaving most producers with negative margins.
Many expected this year to be the year of recovery for hog farmers, after watching the North American sow herd shrink over the past year. They believed that the fourth quarter of 2008 was the bottom of the four-year price cycle.
The price rally that occurred in February was assumed by many to be the beginning of a longer-term recovery, with steadily strengthening prices expected over the hotter months and the barbecue season.
But the rise weakened and then news coverage of H1N1, which was referred to as swine flu by much of the media, appeared to cause a plunge in pork prices as markets recoiled from pork.
Prices recovered after an initial freefall and gained back most of the lost ground, before abruptly plunging again.
The resulting mood among producers at the World Pork Expo was glum.
“We’re supposed to be getting a rally right now,” said hog farmer Randy Schmidt of Williamsburg, Iowa, after attending educational seminars at the expo.
“This has got to end or there won’t be too many producers left.”
None of the analysts at the large hog industry event offered much hope that prices will recover soon.
They said the weak global economic situation is likely to suppress pork demand for an extended period, which means the North American sow herd needs to shrink by a further five to 10 percent to better balance supply and demand and provide profitable margins to the producers who survive.
In the past year, the herd has shrunk by only two percent.
The troubles in the world hog industry were evident in the decreased number of exhibitors at the sprawling trade show, fewer people visiting the booths and reports of hotel vacancies in Des Moines during a week that usually sees everything booked up with visitors.
This year, the expo cancelled its tours of the Iowa hog industry because of the shortage of international visitors.
There also appeared to be fewer Canadians at the show. Canadian breeding companies set up booths at the trade show, but not many prairie hog farmers could be found walking the aisles.
The Manitoba hog industry has been ravaged by U.S. country-of-origin labelling, which has closed the main market for the millions of weanling pigs produced in the province’s southeast.
Iowa and southern Minnesota feeder barn operators usually buy those pigs, but most are unsure now about whether packers in the U.S. will continue to buy them.
Stein’s and Donaldson’s businesses are affected less by COOL than most Canadian hog producers because they sell genetics and breeding stock to buyers around the world, and most of the animals they sell don’t quickly end up at U.S. slaughter plants.
Still, they’ve noticed a slump in the business as producers draw back from reinvesting in the industry.
“It affects the market. It affects our customers,” Donaldson said.
Stein expects further damage to Canadian and U.S. producers because of COOL, which he thinks will drive losses deeper and increase the slump.
“This COOL program’s really going to hurt North America in the long run because the industry’s evolved into a natural movement back and forth, north and south, between the two countries.”
Donaldson said it’s depressing to not see any recovery coming soon.
“This is going into the fourth year of losses,” he said.
