Hog inventories are falling and farmers are leaving the industry, in the wake of high feed costs and soft slaughter prices, according to new data from Statistics Canada’s April 2008 hog survey.

Data released Thursday from the federal statistics agency show that the hog industry in Canada is in “a state of transition,” as the feed costs and slaughter prices, prevalent in the hog market for some time now, squeezed profit margins to the limit.

As of April 1, Canada had almost one-fifth (19.3 per cent) fewer hog farmers than in April 2007. Of those still in business, a number had closed their barns or reduced their breeding herd, or both.

Farmers had an estimated 13 million hogs on their farms on April 1, down 1.7 million, or 11.7 per cent, from the same date in 2007. This was the largest year-over-year drop in three decades, and the fifth consecutive quarterly decline in total hog inventories.

The number of sows fell 4.6 per cent during this 12-month period.

With rising feed costs, many hog producers are shifting mainly to farrowing operations from the more traditional farrow-finish operations. This has led producers to export their hogs, mostly weaners, at a strong pace, principally to the U.S.

Farmers exported an estimated 2.9 million hogs during the first three months of 2008, a 25.9 per cent increase over the same period a year earlier. At the same time, the domestic slaughter of hogs in Canada slipped 1.1 per cent compared with the first three months of 2007.

A $50 million federal cull program, which was announced in February and opened for applications from hog farmers on April 14, is meant to help the hog industry restructure by helping cut Canada’s swine breeding herd (sows, boars and pregnant gilts) by about 10 per cent.

Qualifying producers, subject to application approval, will get $225 per breeding swine culled after April 14, and will get reimbursement for costs of slaughter and carcass disposal.

A payment of $225 per breeding swine less the selling price will be available for producers who sold animals from Nov. 1, 2007 until April 13 this year and can produce receipts and supporting documents.

“Further reductions in the hog breeding herd are anticipated across the country once the program is implemented,” StatsCan said.

Canadian hog inventories at April 1, 2008 (‘000 head, plus percent change from April 1, 2007)

	National	East	West
Breeding hogs	1,498	804	694
(per cent change)	-4.6	-5.7	-3.3
Market hogs (<20kg)	4,295	2,389	1,905
(per cent change)	-9.6	-9.9	-9.1
Market hogs (>20kg)	7,207	4,231	2,976
(per cent change)	-14.3	-12.1	-17.2
Total hogs	13,000	7,424	5,576
(per cent change)	-11.7	-10.8	-13.0