Western Hog Exchange estimates farmers lose nearly $50 per pig
By Diego Flammini
Plummeting hog prices are causing some Alberta farmers to lose hundreds of thousands of dollars in potential revenue.
Alberta hog farmers earned about $50 per hog at the end of June, Western Hog Exchange data shows. Now, farmers are losing that amount.
Canadian farmers receive the same prices as their U.S. counterparts, which can put them at a disadvantage.
Chinese and Mexican tariffs on U.S. pork, paired with currency exchange rates, mean Alberta’s hog farmers are losing upwards of $50 per pig, said Brent Bushell, general manager of the Western Hog Exchange.
“Right now, we’ve got a situation where the U.S. isn’t exporting as much pork and there’s a surplus of hogs,” he told Farms.com today. “A surplus of hogs means packers don’t have to pay as much and the price drops. Because producers in Canada market off that depressed price, farmers are losing between $40 and $50 Canadian per hog right now.”
The market decline comes at a bad time for hog producers.
The swine marketing year is typically divided into two six-month periods, Bushell said.
Between about April and the beginning of September, farmers can make money.
But from about mid-September until the end of March, producers’ revenue can be much smaller due to supply and demand.
“The best they can generally do between September and March is break even,” Bushell said. “They hope that in the year they make more than they lose.”
As hog producers enter the down period of the year, they may be faced with tough decisions.
And unlike grain, swine farmers can’t keep a large inventory on the farm until market prices increase.
“A farmer has to let the hogs go on shipping day because they need the barn space. They don’t have some of the benefits of other commodities,” Bushell said. “If a wheat farmer doesn’t like the market price, they can keep it in the bin and supply managed commodities are guaranteed a revenue.”
“If a federally inspected, commercial producer ships out 200 pigs a week and loses $50 per pig, that’s a $10,000 loss each week,” Bushell said. “Multiply that by six months and you’re looking at losses of nearly $260,000. Some farmers might look at those numbers and decide to leave the industry because losing that kind of money isn’t good business.”
So, what can the industry do to ensure Alberta hog producers receive fair market price?
Developing a “made in Canada” price would be an option but it could be difficult, Bushell said.
Veterinarians, producers, feed suppliers and transporters would all want to make sure they receive a fair share of a determined market price.
As would processors, who can benefit from lower producer prices.
“We could have a Canadian price tomorrow,” Bushell said. “But if I’m a packer making $50 a hog and I’m still receiving the same number of hogs, why am I going to come to a table? If I do that as a packer, I’m taking on risks like exchange rates and other things that, right now, the producer takes on.”