When Agriculture Canada economists drew up comparative models of “representative” hog operations in Ontario and Alberta, the first thing to factor in was higher market prices in Ontario.
Both farms were set up as 150-sow farrow-to-finish operations and yet revenue from hog sales at the Ontario farm were projected at $265,361 in 1998, compared to $182,390 for the Alberta farm.
But the bottom line is what counts and the Alberta advantage is clear.
According to the projections for this year, the Alberta hog farm would net $56,865 in cash income. The Ontario producer would end up with less than 40 percent of that, $21,826.
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The difference, said Agriculture Canada economist Gary Fisher, is feed costs.
The typical Ontario farm would sit on 120 acres and buy most of its feed as corn. The feed bill would take up most of the Ontario farm’s expenses bill.
In Alberta, the typical family-owned hog operation would have at least a section of land and grow most of its own barley.
“Eastern Canada is susceptible to higher feed costs than the West and it gives a real advantage to the West,” said Fisher.
Gloomy in both provinces
For hog farms in both provinces, however, 1998 does not shape up as a good year.
After high prices and strong markets in 1997, which produced the best cash incomes of the decade for hog producers, prices will continue to fall through 1998, said Fisher.
On the model Alberta hog operation, the departmental projection is for a net cash income decline of 34 percent from 1997 levels. The Ontario operator would face a 45 percent income collapse.
Fisher said even as the Ontario industry expands, the same pattern of feed purchasing remains.
He said a number of large, 1,000-acre-plus hog operations have developed west of Guelph, Ont., through farm amalgamation, co-operative arrangement or takeover.
Yet most of them do not use the land for feed, since it is expensive and complicated to move into corn production.
Instead, many of these larger farms lease the land to nearby cash crop farmers and buy their feed.
“The pattern in Ontario has been to buy rather than grow feed and of course, that is a tremendous cost to an operation,” said Fisher.
