Pork industry sees uptick despite skyrocketing input costs
While returns have improved, the sector has lost about 40 per cent of its farms in the last decade
By James Snell, Contributor, Alberta Farmer Express (Canada)
August 3, 2022
Hog farming has been a tough slog for years, but matters have improved slightly since the beginning of the pandemic, says the executive director of Alberta Pork.
Unfortunately, soaring input costs are running in parallel with higher hog prices, and the industry remains in decline, said Darcy Fitzgerald.
There are now an estimated 300 commercial hog farms in Alberta, down from around 500 a decade ago.
“We’ve seen a trend towards the independent producer becoming a contract finisher for the integrators or larger farms,” said Fitzgerald. “But we have seen some pricing changes. Some processors have made changes to make pricing better than it was in the past. If you look at pricing and what the returns are, I’d say the last three years have been better than the previous 10.”
That’s because global demand for meat is strong and consumers are willing to pay more for a quality product, he said. Also, there are a limited number of countries that can produce and export pork because many have been affected by African Swine Fever.
“I don’t want to say we are sitting pretty, but we sit in a good position to be able to supply pork to other countries,” said Fitzgerald. “Now, it would be much better if we weren’t delisted from China and China was buying more of our products.”
Feed costs have shot up, surpassing $200 a tonne compared to about $150 a year ago, said Fitzgerald, adding the war in Ukraine makes the situation worse.
“Then you must add in all your minerals and vitamins and everything else. Around $185 per pig was the cost of production a couple years ago. Now we are up in the $225 to $230 range. That increase in price needs to be there to cover those costs. It’s not to say there aren’t people making money and there aren’t new hog farms going up.”
Fitzgerald said the U.S. Department of Agriculture has data going back 52 years that shows who makes money in the pork industry in that country and the figures are likely similar in Canada.
“There used to be a time when the producer made the lion’s share,” he said. “The packer made a little bit less and the retailer made the least amount, but we still made money off selling the product. Fifty-two years later, it has completely gone the other way around. It’s almost a flat line for producers in terms of dollars.”
The cost of labour is another concern for farmers, as is the recent rise in Canadian interest rates.
“The cost for borrowing money will be quite high,” Fitzgerald said.
Looking ahead ...