Opportunity in hogs
With pig prices fluctuating to the lower end, plans to expand or begin production should start now, says Paul Marciniak of Saskatchewan Agriculture’s pork implementation team.
The price cycle for pork is repeated approximately every four years. As prices for pork decline, producers exit the business faster than new entrants are attracted.
“This results in reduced supplies of slaughter hogs and, eventually, results in demand exceeding supply,” Marciniak said. “When demand exceeds supply, the only way for the market to ration available supplies is through price increases. When prices begin to increase, new producers enter the industry, supply is increased to the point it exceeds demand and prices must fall in order to sell all the pork available.”
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Traditionally, hog production has been cited as a textbook example of a price cycle. The prolific nature of sows and the relative ease of entry into the industry are the primary reasons.
Low investment
“A single gilt held back from slaughter can, theoretically, in two years produce 40 market hogs and another litter of feeder pigs,” he said. “Historically, the capital investment required for production of pigs was low relative to other agricultural enterprises. This allowed for easy entry and easy exit because high fixed costs did not have to be covered.”
The trend in hog production involves much greater capital cost than in the past. This, according to some observers, will result in a levelling of price cycles.
“A large, modern hog barn cannot afford to produce hogs only when prices are high,” he said. “The fixed costs associated with modern hog production dictate that production must be kept constant.
“This is not to say, however, that the price cycle will be eliminated entirely. There are still more than enough production units with very low fixed costs that will enter when hog prices are high and exit when prices fall.”
Because the early years are so important to the long-term success of a hog barn, the time to begin planning a new pig barn is now, Marciniak says.
“By the time a business plan can be prepared, financing arranged, a site chosen, construction com-
pleted, the barn stocked and slaughter animals ready for market, the market price should be well on its way to recovery,” he said.
– Saskatchewan Agriculture
Low sulphur diesel
The advent of low sulphur diesel fuel has some farmers wondering whether this fuel will damage their engines, says Alberta Agriculture’s energy engineer.
“The other half of the question is whether they can use regular sulphur diesel fuel in newer diesel engines designed to burn cleaner and use low sulphur fuel,” said John Chang.
The new generation of diesel engines was introduced to the Canadian market with the 1995 model year. They hit the U.S. market in 1993.
The answer to the first question of whether low sulphur diesel will damage older diesel engines is no. Low sulphur has been around before this fall.
“Most major petroleum companies here have been making low sulphur diesel for over five years, one as long as 10 years. So, diesel engines have most likely been running on low sulphur diesel for years.”
Chang said reports from the U.S. about engine problems due to low sulphur diesel were misleading. “Many problems with fuel system leakage in California and some other areas were initially attributed to low sulphur diesel. Investigation indicated the problems were due to low aromatic content of some special diesel fuels.”
Damage possible?
Will a 1995 model diesel engine be damaged by regular sulphur diesel? The answer is: it depends.
“If your vehicle is equipped with a catalytic converter or trap – all heavy duty and some medium duty truck engines – manufacturers say damage shouldn’t occur. However, the engine will exceed the particulate emission limit it was designed to meet,” explains Chang.
On the other hand, if the 1995 diesel vehicle is not equipped with a catalytic converter or trap – some medium duty truck engines and all light duty engines – manufacturers caution prolonged use of regular sulphur diesel could cause serious and permanent damage to the exhaust after-treatment device.
“Using regular sulphur diesel might also affect your warranty coverage,” warned Chang.
Fuel additives are generally not needed or recommended.
Farmers with 1995 model diesel vehicles should read their owner’s manual or talk to their vehicle manufacturer to determine what type of diesel fuel is recommended. “Then, talk to your fuel supplier to make sure you are getting the right type of fuel. All suppliers have fuel quality specialists who can answer your questions.”
– Alberta Agriculture
