The Canadian hog industry may be about to undertake one of the sharpest declines in production that it has experienced in recent times.
In 2007, the country produced 30 million hogs. Canadian federally inspected hog slaughter was 20.2 million head, down 2.4% from a year earlier. About 56% of the resulting pork (917,000 mt in 11 months last year, down 4.2%) was exported. Canada was the third largest pork meat exporter in the world, after the EU, and USA. Additionally, Canada exported about 3.2 million hogs to the USA for immediate slaughter, and a further 6.5 million head of feeder pigs for finishing in the USA and slaughter.
Canadian live hog exports were up 12.9% last year. However, the Canadian industry is experiencing other troubles.
An appreciation of the Canadian dollar over the past two years, driven by the international commodity and oil boom, has caused a huge cost disadvantage on the meat industry. Grain prices have doubled in a year, driven by the international grain shortage, and by the growing ethanol industry in Canada and the USA.
Additionally, Canada’s booming economy has caused a meat plant labour shortage. There is now insufficient plant capacity remaining to slaughter all the hogs produced.
In terms of exports, a prolonged shortage of refrigerated containers coupled with higher ocean freight rates has made exporting Canadian pork even more difficult.
None of these problems appear likely to end in the near future. According to the UDSA, supplies on farms were 4.2% higher, suggesting that the pork market will continue to be burdened with heavy supplies for some time to come. Due to accelerated ethanol production, it is also highly unlikely that feed prices will decrease in 2008.