Sow Depopulation Raises Hog Shortage Spectre

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As the hog industry continues its economic free fall and more producers leave the business, a worrisome question arises: will Western Canada have enough pigs for its pork packing plants?

The question would have been unthinkable a few years back when production was booming and the sky seemed the limit for the rapidly expanding pork industry.

But with the industry now imploding nearly as fast as it once expanded, some fear that plants may not be able to fill their shackle space.

That would be a severe blow to pork packers and their expensive state-of-the-art plants, built on the assumption of an inexhaustible hog supply.

“It’s hard to have a meat packing plant if there’s no hog industry,” said Don Hrapchak, general manager of SPI Marketing Group in Saskatchewan.

No one is suggesting that Western Canada will run out of pigs and packers will have to mothball plants.

But a recent analysis by the George Morris Centre in Guelph, Ontario suggests the growing depopulation of breeding sows across the West could seriously affect packers.

Kevin Grier, senior market analyst, noted Stomp Pork Farm of Humboldt, Saskatchewan stopped breeding sows at the end of May. Stomp, the second-largest hog producer in the province, is currently under bankruptcy protection.

The company plans to depopulate its Canadian farrowing operations by the end of summer. Its U.S. finishing company is in receivership.

Stomp’s financial problems, due to the familiar combination of high costs, the strong Canadian dollar, COOL and now H1N1, is symptomatic of sow losses across the West, Grier wrote in a weekly market review.

The loss of sows leaves expansion plans for plants in Alberta and British Columbia in some doubt, he said.

According to Grier’s analysis, Olymel in Red Deer will be short of hogs to fill a full double shift of 80,000 head per week. An 80,000-weekly kill would require over 200,000 sows. At last count, Alberta had 160,000 sows.

Besides Olymel, Alberta’s sow base also supplies Maple Leaf in Lethbridge, Sunterra Meats in Trochu, and Britco Pork Inc. in Langley, British Columbia.

Packer capacity

Meanwhile, Maple Leaf in Brandon, Man. is running at over 80,000 hogs a week and Springhill Farms in Neepawa, Man. is ramping up its weekly capacity to 27,000 head from the current 18,000.

If Red Deer goes to 80,000, Western slaughter capacity will be 204,000 hogs a week, or over 10 million a year, greater than the eight million hogs processed in 2008.

“Kills of 10 million need a sow base of 490,000 to 500,000 sows. As of early 2009, the West had over 600,000 sows,” Grier wrote.

“Clearly there is sow capacity in the West, but most are in the eastern Prairies. In addition, the dismal financial returns this spring due to the dollar and H1N1 are going to send thousands more sows to slaughter.”

Sow depopulation is already having an impact on plants in Alberta, said Ron Gietz, an Alberta Agriculture business development specialist.

“There’s not enough sows for the slaughter capacity that we have here,” Gietz said from Brooks.

“There is a concern whether the industry is going to have a critical mass to keep facilities running in this part of Canada. They won’t be running at capacity and that’s no secret. That’s already the case.”

Maple Leaf officials were guarded when asked about possible future hog shortages.

“We have an ample supply,” said John Carney, vice-president of live procurement for Maple Leaf Meats. “I really can’t speculate what the future holds.”

Gloomy outlook

According to Statistics Canada, the future looks bad. As of April 1, 2009, total hog inventories across the country were down 8.6 per cent from the previous year. Western inventories were down 10.8 per cent.

Even more disturbing is the decline in the breeding herd. The number of breeding animals was down 8.7 per cent in the West (including a 20.6 per cent drop in Saskatchewan) and down 6.2 per cent nationally.

The decline in Manitoba is slightly less steep but still a concern for future packer capacity, said Perry Mohr, Manitoba Pork Marketing Co-op general manager.

“At some point, the supplies will decrease to a number that will not meet the actual number of slaughter spaces or shackles in the province. It’s pretty much simple economics,” Mohr said.

Ironically, Mohr’s concern last year was finding enough slaughter space for excess market hogs in Manitoba which couldn’t be exported because of COOL.

Now the problem may be reversed because of herd liquidation.

“The longer this goes on, the less the chance of there being enough animals to fill all those shackles,” said Mohr. [email protected]

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