RED DEER, Alta. – Jack Moerman wants to remain optimistic about the hog industry.
When he looks at his own operation at Redwater northeast of Edmonton, the situation is grim. His son has opted to go into the chicken business rather than join his father as a hog farmer.
“I guarantee you if this continues there will be a significant amount of hog producers, especially the younger producers, the higher leveraged producers, are going to go under,” he said.
“You can speak with the bankers all you want and they will say ‘yes, we want to help you through this pain.’ But if you come as an individual producer and you virtually have no equity, they are not a benevolent organization.”
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He grows about 900 acres of grain and hopes a decent crop will pay some of his bills this fall.
He forward contracts about a third of his hogs to the Western Hog Exchange and holds back others in hopes of a price turnaround. So far producers have been lucky to get $1 per kilogram when their cost of production is upwards of $1.30.
Below expenses
“In hindsight we could have locked in almost every month at $1.40 or better,” he said.
With some pigs locked in at $1.40 and the cash price at $1.02, he is averaging $1.20, which is not enough to cover expenses.
“The worst thing that could ever have happened was $2.10 a kg two years ago. Guys were projecting 20 percent return on your dollar and it gave a false sense of confidence.”
