News
Hog statistics, a request to the USDA and crush statistics

April 24, 2008

Hog inventories are falling and farmers are leaving the industry, in the wake of high feed costs and soft slaughter prices, according to new data from the April 2008 Hog Survey.

Data show that the hog industry in Canada is in a state of transition, as the feed costs and slaughter prices, which have been prevalent in the hog market for some time, have squeezed profit margins to the limit.

As of April 1, 2008, Canada had almost one-fifth fewer (-19.3%) hog farmers than in April 2007. Of those still in business, a number had closed their barns or reduced their breeding herd, or both.

Farmers had an estimated 13.0 million hogs on their farms on April 1, down 1.7 million, or 11.7%, from the same date in 2007. This was the largest year-over-year drop in three decades, and the fifth consecutive quarterly decline in total hog inventories.

The number of sows fell 4.6% during this 12-month period.

With rising feed costs, many hog producers are shifting mainly to farrowing operations from the more traditional farrow-finish operations. This has led producers to export their hogs, mostly weaners, at a strong pace, principally to the United States.

Farmers exported an estimated 2.9 million hogs during the first three months of 2008, a 25.9% increase over the same period a year earlier. At the same time, the domestic slaughter of hogs in Canada slipped 1.1% compared with the first three months of 2007.

On February 25, 2008, the Government of Canada announced a cull breeding swine program aimed at reducing the size of the breeding herd. Further reductions in the hog breeding herd are anticipated across the country once the program is implemented.

Revisions have been incorporated back to July 2007.

Available on CANSIM: table 003-0004, 003-0087 to 003-0090, 003-0092 and 003-0093.

Definitions, data sources and methods: survey number 3460.

The first quarter 2008 issue of Hog Statistics, Vol. 7, no. 2 (23-010-XWE, free), is now available on our website. From the Publication page, choose Free Internet publications, then Agriculture.

In a related story from the US (via AgWeb.com), the National Pork Producers Council (NPPC) has asked the United States Department of Agriculture for assistance, citing rising feed costs and tightening credit markets. The request is made in an effort to stem mounting financial losses. Council members met this week with USDA Secretary Ed Schafer to urge him to take immediate action to address what now is a hog industry economic crisis, which likely will affect the broader U.S. economy.

"Over the past seven months, U.S. pork producers have lost more than $2.1 billion. Due almost solely to a doubling of feed costs, producers now are losing $30-$50 on each hog marketed. Lenders are estimating that some producers could lose up to half or more of the equity in their operations by year-end," says the group.

The NPPC says economists have estimated the industry will need to reduce production by at least 10 percent – meaning a reduction of 600,000 sows – to restore profitability. "But that cutback could be costly, with less-efficient packing plants closing; less manure for crop fertilizer and correspondingly a need for more man-made, foreign-produced fertilizer; a hike in pork retail prices because of a smaller supply; and lost pork industry jobs," says NPPC. "Other industries that benefit from pork production, such as Main Street businesses, feed mills and trucking companies, also likely would see job losses. Additionally, there likely would be agricultural credit problems as some producers default on loans."

During discussions with Schafer – and in a letter presented to the secretary – NPPC President Bryan Black, a pork producer from Canal Winchester, Ohio, requested that USDA purchase an additional 50.5 million pounds of pork for various federal food programs. NPPC says this would reduce the U.S. sow herd by nearly 163,600 animals. Black also asked that the secretary implement emergency programs and loan guarantees to help producers purchase feed, consider allowing early release without penalty of non-environmentally sensitive Conservation Reserve Program acres back into crop production and support pork exports through USDA’s Market Access Program and Foreign Market Development Program.

Back to the Statistics Canada numbers, oilseed processors crushed a monthly record of 374 283 metric tonnes of canola in March. Oil production totalled 157 355 metric tonnes in March, while meal production amounted to 228 661 metric tonnes.

The amount of canola crushed since the beginning of the crop year also reached a record, at 2 811 169 metric tonnes. The previous August-to-March high had been 2 394 274 metric tonnes in 2006/2007.

Available on CANSIM: table 001-0005.

Definitions, data sources and methods: survey number 3404.

The March 2008 issue of Cereals and Oilseeds Review (22-007-XIB, free) will be available in May.