{"id":7599,"date":"2011-07-14T19:51:53","date_gmt":"2011-07-14T19:51:53","guid":{"rendered":"http:\/\/prairieswine.com\/rsc\/?p=7599"},"modified":"2011-07-14T19:51:53","modified_gmt":"2011-07-14T19:51:53","slug":"industry-crisis-census-confirms-producer-devastation","status":"publish","type":"post","link":"http:\/\/prairieswine.com\/rsc\/industry-crisis-census-confirms-producer-devastation\/","title":{"rendered":"Industry Crisis – Census confirms producer devastation"},"content":{"rendered":"

\u00a0<\/span><\/span>The April census data showed the extent of the devastation being wreaked in the Canadian pork industry, with almost one-fifth fewer (19.3%) producers than in the same month of 2007.\u00a0 <\/span>Total pig numbers for the country were down 11.7%, indicating that the exodus was mainly among the smaller producers.\u00a0 <\/span>Atlantic Canada showed the biggest drop in total pig numbers, with a massive 25.5% drop and Alberta and Saskatchewan both showed a 16.8% reduction.\u00a0 <\/span>Other than British Columbia\u2019s fall of 6.9%, the lowest drop in numbers was in Quebec, where the ASRA program helps to maintain hog prices.\u00a0 <\/span><\/span><\/span><\/span><\/p>\n

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Table 1:\u00a0 <\/span>Percentage change in pig numbers \u2013 April 2007 to April 2008<\/span><\/span><\/h1>\n

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\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>\u00a0 <\/span>CAN\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>AB\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>SK\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>\u00a0 <\/span>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>MB<\/span><\/span><\/span><\/h3>\n

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Total pigs\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>-11.7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>-16.8\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>-10.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>-2.0<\/span><\/span><\/p>\n

Breeding stock\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>-4.6\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>-7.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>-3.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>-1.4<\/span><\/span><\/p>\n

Other pigs\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span><\/span><\/span><\/p>\n

< 20kg\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>-9.6\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>-15.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>-7.8\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>-5.3<\/span><\/span><\/p>\n

>20kg\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>-17.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>-19.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>-22.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>-13.7<\/span><\/span><\/p>\n

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In the western provinces breeding pig numbers dropped most in Alberta, at 7.1%, while Manitoba had just a 1.4% reduction in sows, gilts and boars.\u00a0 <\/span>However, in the East, Ontario fell 7.9% while, as might be expected, Quebec was the lowest with 2.9% fewer breeding animals.\u00a0 <\/span>The under 20kg category showed substantial reduction in numbers in Alberta, BC and Ontario, with -15.4%, -25.2% and -14.4% respectively, while losses were lower in Manitoba (-5.3%), Saskatchewan (-7.8%) and Quebec (-5.0%).\u00a0 <\/span>Reflecting the huge trend towards shipping young pigs south of the border, Saskatchewan\u2019s pigs in the over 20kg category fell by 22.1% and Alberta\u2019s by 19.1%, while Manitoba\u2019s numbers fell by 13.7%.\u00a0 <\/span>During the first 3 months of 2008 an estimated 2.9 million pigs were exported, a 25.9% increase over the same period last year. At the same time, domestic slaughter of hogs slipped 1.1%, although this number is likely to increase sharply as supplies of market hogs dry up.<\/span><\/span><\/p>\n

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All eyes will be on the July census figures, which are likely to show further reductions. Although anecdotal evidence suggests that the number of producers making the decision to leave the industry is now far fewer, it will likely be another six months before pig numbers stabilize.<\/span><\/span><\/p>\n

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Prairie Swine Centre suspends operations at Elstow unit<\/span><\/span><\/span><\/em><\/h1>\n

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Reflecting the current malaise in the pork industry, the Prairie Swine Centre announced on May 9th<\/sup> that its PSC Elstow Research Farm would be suspending operations due to the unprecedented losses in the pork business.\u00a0 <\/span>The unit, a 600-sow farrow to finish barn, designed to support research work in a commercial-style barn, opened in April 2000. The mandate of the facility is to address the needs of the pork industry for research work using a size and scale typical of the commercial industry.\u00a0 <\/span>Research to address these needs will continue to be the focal point at the remaining Prairie Swine Centre facilities.\u00a0 <\/span><\/span><\/span><\/span><\/p>\n

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Dr. John Patience, President and CEO of PSC Elstow Research Farm, acknowledges the magnitude of the disappointment and distress this decision has on its employees, as well as on the staff at Prairie Swine Centre, and indeed on the broader Canadian pork industry. \u201cThe fact that all pork farms in Canada and virtually every other pork producing nation in the world are being devastated by the current market conditions is little solace to the many people who have worked hard to operate the farm and have come to rely on the knowledge generated from the research conducted there\u201d. \u201cWe have long-term confidence in the future of the Canadian pork industry as a favoured supplier to meet the growing demand for the world\u2019s most popular meat protein; however the particular circumstances of this barn make it unviable in the short-term. From the beginning, the strength of this business was its mirroring of real commercial production conditions. In the end, these parameters such as debt structure, the devaluation of the US dollar upon which Canadian pork prices depend, unprecedented increases in grain and protein meal prices and underestimating the impact of research functions on an operating farm has resulted in this business decision to suspend operations until conditions improve.\u201d <\/span><\/span><\/p>\n

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In spite of this setback, a new initiative started over two years ago is now complete.\u00a0 <\/span>The $2 million renovation at the original barns located at Prairie Swine Centre will reduce operating costs, making the farm a more competitive pork producer. <\/span><\/span><\/p>\n

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Alberta<\/span><\/em> strategy focuses on added value and better marketing<\/span><\/em><\/span><\/span><\/h1>\n

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The final draft report on the Alberta pork industry\u2019s revitalization strategy is now completed and details were presented to the province\u2019s pork producers at two open industry meetings at the end of May.<\/span><\/span><\/span><\/p>\n

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\u201cThis strategy is about leading our industry in a new way,\u201d says Herman Simons, Alberta Pork chairman and Tees, Alta. pork producer.\u00a0 <\/span>\u201cIt\u2019s called \u2018The Way Forward\u2019 because our industry is in unprecedented distress and we believe that we need to develop new options if pork producers are to survive this distress and have sustained profitability in the future.\u201d<\/span><\/span><\/span><\/p>\n

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The strategy was developed by Toma and Bouma Management Consultants and the George Morris Centre, who in turn consulted with appropriate resources both nationally and internationally.\u00a0 <\/span>The first pillar of this broad analysis, a state-of-the-union report, was completed in March and made available to producers.\u00a0 <\/span>The report, entitled \u201cThe Way Forward, The Situation Assessment of the Alberta Pork Industry,\u201d outlined the situation the industry faces and reviews developments from around the world as a basis for evaluating new options.<\/span><\/span><\/span><\/p>\n

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\u201cThe second pillar report, which is just being released, is the actual strategy for moving ahead with repositioning our product in the marketplace,\u201d says Simons.\u00a0 <\/span>\u201cThe Alberta Pork board has reviewed the draft document, but before we move through final approval, we wanted to give producers an opportunity for direct input.\u00a0 <\/span>This will be important as we work together with industry stakeholders to implement this strategy.\u201d <\/span><\/span><\/span><\/p>\n

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The strategy vision, he says, is a highly connected pork industry capable of delivering differentiated, high quality, safe pork products in a sustained manner, with the flexibility to respond to continually changing markets and market conditions.\u00a0 <\/span>The strategy seeks to move the industry out of the highly competitive and unprofitable production of low-cost bulk pork products.\u00a0 <\/span>Instead, the industry focus will be on producing high-value pork products in demand by consumers in domestic and global niche markets. <\/span><\/span><\/span><\/p>\n

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The repositioning strategy basically covers four areas, says Simons.\u00a0 <\/span>First is to establish system integrity in production, processing and marketing to create a highly connected industry through proactively managed supply chains between the processing sector and producers.<\/span><\/span><\/span><\/p>\n

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Second is to develop new product marketing capability, the establishment of new business-to-business skill sets that develop long-term supply relationships with a set of targeted markets and customers.<\/span><\/span><\/span><\/p>\n

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Third is to address cost challenges by developing strategies to reduce the two major cost items facing pork production: feed grains and labour. <\/span><\/span><\/span><\/p>\n

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Finally, the goal is to create a favourable business environment, ensuring that the industry has the necessary public and private services, tools and instruments to successfully compete in a global meat industry.<\/span><\/span><\/span><\/p>\n

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\u201cWe realize this is not an easy path to the future for pork producers and that there are no simple solutions to our challenges,\u201d says Simons.\u00a0 <\/span>\u201cHowever, the report has identified several strengths within our industry and we have confidence in the ability of our producers and processors to work toward capturing those in a realistic fashion.<\/span><\/span><\/span><\/p>\n

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USDA agrees to help US pork producers<\/span><\/em><\/span><\/h2>\n

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The US National Pork Producers Council (NPPC) commended the Bush administration for its decision to lend assistance to US pork producers to help them weather the current economic crisis in the hog business and announced in May.\u00a0 <\/span>The US Department of Agriculture (USDA) is purchasing up to US$50 million of pork products, which will be donated to child nutrition and other domestic food assistance programmes.<\/p>\n

NPPC representatives had previously met with agriculture secretary Ed Schafer to urge him to take immediate action to address a crisis that over the past seven months has cost the pork industry more than $2.1 billion, says a news release from the producer organization.\u00a0 <\/span>
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\nEconomists have estimated that the industry will need to reduce production by at least 10% – meaning a reduction of 600,000 sows – to restore profitability.\u00a0 <\/span>Such a cutback, however, could result in less-efficient packing plants closing, less manure for crop fertiliser and correspondingly a need for more man-made, foreign-produced fertiliser, a hike in pork retail prices because of a smaller supply and lost jobs, says the NPPC. <\/span><\/span><\/span><\/p>\n

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\u201cThe action by USDA to buy additional pork will benefit America\u2019s pork producers, the US economy and the people who rely on the government\u2019s various food programs,\u201d said NPPC president Bryan Black.\u00a0 <\/span>\u201cIt will help our industry reduce the herd and thereby bring supply and demand back into balance and allow producers to continue to provide consumers with economical, nutritious pork.\u201d<\/span><\/span><\/span><\/p>\n

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EU production falls and prices increase<\/span><\/span><\/em><\/span><\/h2>\n

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There now seems to be some light at the end of the tunnel for European pig producers following a reduction in herd size in most countries.\u00a0 <\/span>This has now led to strengthening prices, although industry leaders have pointed out that there is still a long way to go before producers are profitable again.\u00a0 <\/span>Reports predict that pork production within the EU as a whole will be 4.1% lower in the final quarter of the year compared to 2007.\u00a0 <\/span><\/span><\/span><\/span><\/p>\n

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British pig production, with its high production costs, is still under major pressure and sow culling has been running at the highest level in Europe.\u00a0 <\/span>In January the number of breeding stock slaughtered rose by 46%; in February, the increase in comparison to 2007 was\u00a0 <\/span>40%\u00a0 <\/span>and March saw a growth of 18%.\u00a0 <\/span>Having halved in size over the last 10 years, the industry looks set to shrink even more.<\/span><\/span><\/span><\/p>\n

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Prince Charles waded into the battle British producers are having with supermarkets to get a fair share of the retail price of pork.\u00a0 <\/span>\u201cMy heart goes out to all those farmers who are facing such desperate problems as a result of the huge rise in feed costs,\u201d said Prince Charles in a message to the pig industry.\u00a0 <\/span>\u201cThanks to the enormous efforts of BPEX (British Pig Industry Executive) and the National Pig Association, there is a growing awareness of the problem, and those retailers who are raising their prices as a result should be congratulated. However, little, if any, of the increase is being passed down the chain to the farmers and, unless urgent action is taken, this country\u2019s pig sector, which has never received subsidies, could be decimated.\u00a0 <\/span>This would be a tragedy for this country which produces some of the finest quality pigs and which operates according to the highest standards of husbandry and animal welfare,\u201d said the letter.<\/span><\/span><\/span><\/span><\/p>\n

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Spain<\/span>, the second largest producer of pigs in the EU, is also feeling the pinch, according to pig industry<\/span><\/span><\/span> association Anprogapor, which says its members are struggling with rising feed costs. It estimates that 15 per cent of the 70,000 pig producers in Spain have now ceased production. Production costs are currently around \u20ac1.20 per kilo of delivered weight, while market prices half-way through 2007 were reaching around \u20ac0.90, says a report.<\/p>\n

Anprogapor says the situation is unsustainable and that around 200,000 sows have been taken out of production. The result has brought an increase in market prices, but it is not high enough for more farmers to reach profitable levels.<\/p>\n

A four-year long drought is exacerbating the situation and provincial governments continue to press for water supplies to be drafted in from neighbouring countries such as France. <\/span><\/span><\/p>\n

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Danish producers have always taken a long-term view of the ups and downs of the hog cycle, but their confidence appears to have been shaken by events over the past year. Urged by their industry leaders to stick it out until prices improve, many have decided enough is enough and quit the business. Total pig numbers were down by 10.4% in April 2008 compared with the same month last year, with a similar drop in the number of sows.<\/span><\/span><\/p>\n

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Australian shock at lack of government support<\/span><\/em><\/span><\/h2>\n

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Australia<\/span>\u2019s pig farmers expressed shock when their hope of import safeguards and extra support for the industry were dashed with the publication of the final report to the Federal Government from the Productivity Commission (PC), which was looking into the effect of cheaper imports on the poor profitability of producers.<\/span><\/span><\/span><\/p>\n

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Australian Pork Limited (APL) CEO Andrew Spencer said that the industry is imploding due to cheap imports of frozen pig meat.\u00a0 <\/span>Added to this situation is high grain prices that are making local production completely unviable, he said.\u00a0 <\/span>\u201cTo continue to ignore the fact that all of Australia\u2019s pork imports come from countries that actively subsidise their pig farmers and their pork industry with tax payers funds, laughs in the face of fair trading conditions and a free trade environment.\u201d\u00a0 <\/span>Mr Spencer said 70 per cent of bacon and ham are sourced from overseas countries.\u00a0 <\/span>Despite the high levels of on-farm efficiencies gained by Australian pig farmers over the past five years, Mr Spencer said the industry cannot compete in \u201cthis distorted, totally unbalanced trading environment\u201d.

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<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

\u00a0The April census data showed the extent of the devastation being wreaked in the Canadian pork industry, with almost one-fifth fewer (19.3%) producers than in the same month of 2007.\u00a0 Total pig numbers for the country were down 11.7%, indicating that the exodus was mainly among the smaller producers.\u00a0 Atlantic Canada showed the biggest drop 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