A shortage of hogs has forced Maple Leaf Foods to implement one “non-production” day a week at its Brandon processing plant. While the reasons for the shortage are complex, some in the industry say the solution is simple‚ more pigs.
The Manitoba Pork Council says that means building more finisher barns, which hasn’t happened since 2006 when the province imposed a moratorium on building new hog barns. Today, new barns can be built in many areas of Manitoba, but only if they include an anaerobic digester to handle manure.
Pork Council’s general manager Andrew Dickson says that isn’t realistic.
“You’re not going to spend $1 million on a manure-handling system, it just doesn’t make any sense, it’s uneconomical and you’re not going to be competitive, so it’s a non-starter, no one is going to build a barn until that is resolved.”
Finding enough cash to renew on-farm infrastructure has also presented problems for producers, leading to a reduction in hog production.
“The number of market hogs could be increased… but we need some help to lever more private capital investment on-farm, and for government to stop forcing regulations, which discourage investment,” said Pork Council president Karl Kynoch.
Talks between pork producers and the federal and provincial governments have been ongoing, with the most recent round in Ottawa last week. The council wants a government-backed assistance program for producers struggling to secure capital following nearly four years of dismal returns. But so far, nothing concrete has come out of those discussions.
“At least we’re still talking about it,” said Dickson, while Kynoch described the process as, “very frustrating.”
Manitoba hog production peaked at 5.3 million finished pigs and 4.48 million weanlings in 2007. By 2013 that number had dropped to about 4.68 million slaughter hogs and 2.7 million export weanlings.
“Now some of those will be sows that would have gone south to the U.S., but the bulk of them would be the finish pigs going into plants,” said Dickson.
He added that country-of-origin labelling (COOL), while an ongoing burden for producers and exporters, actually helped buoy Canadian pork processing plants when it was introduced.
“From a processing point in Manitoba, COOL wasn’t a bad idea, because it forced about three quarters of a million finish pigs that had been going to the United States… to go to the processing plants in Manitoba,” Dickson said. “So Maple Leaf for example, in the fall 2008 moved to a second shift, which was a big breakthrough. The plant was designed to be two shifts, hadn’t been able to achieve that, and finally was able to do it.”
But in the face of tightening hog supplies, Maple Leaf will now stop production at its Brandon plant one day each month until the fall.
“It will help us better align production with our operations and supply,” said Maple Leaf spokesman Dave Bauer. “As you know, hog supply across North America remains restricted. It’s an industry challenge and it isn’t something that Maple Leaf is facing alone.”
He added that the temporary slowdown will also help facilitate plant upgrades.
But the main factor remains the continued impact of the 2012 U.S. drought and the affects of porcine epidemic diarrhea south of the border, said Bauer.
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“Simply put, there are less hog producers in the market producing less hogs than a few years ago, which is affecting many industry participants,” he said.
Dickson noted that high grain prices and low returns forced out many smaller hog producers in 2012, but added that changes to industry ownership have also affected the supply of hogs in Manitoba.
When Big Sky was bought by Quebec-based Olymel in early 2013, hogs that once went to Brandon were redirected to processing plants in Alberta.
“So (Maple Leaf) has moved from about 85,000 pigs a week to about 60 to 65,000 pigs a week,” Dickson said.
Maple Leaf had purchased Puratone in 2012 to help shore up its supply of hogs, but the influx was not enough to compensate for other market factors.
“We are working on procurement strategies to increase our supply,” Bauer said. “We are also actively involved with the Manitoba Pork Industry Development Plan and collaborating with industry, governments and producers to increase Manitoba’s pork supply to overcome this temporary supply challenge.”
Manitoba Agriculture Minister Ron Kostyshyn said he has spoken to stakeholders, but stopped short of endorsing the Pork Council’s plan to leverage more cash with government assistance.
“Historically, we’ve provided financing through Manitoba Agricultural Services Corporation,” he said, adding that discussions around investments in the pork industry will continue.
“We haven’t closed the door,” he said.
Kynoch said what the Pork Council would really like is the Manitoba government to change its policy on anaerobic digesters. He said there are alternatives.
“Technologies that protect the environment, but are more cost effective for producers,” he said.
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That technology is a multi-celled manure treatment system that allows for the passive separation of solids from liquids, creating two byproducts that could be injected into the soil.
Dickson added that pig manure is not suited to the anaerobic digesters mandated by the province.
“It might work with dairy because there is so much fibre in dairy manure… but it’s not working in pigs. With pigs the manure is 93 or 94 per cent water and there’s not enough material in there to bubble away and make something‚ you can’t make gas out of water,” he said.
One Hutterite colony in western Manitoba has installed an anaerobic digester at its hog barn, but Dickson said that despite extra investments and years of adjustments, it is not working properly, if it at all.
The council discussed the possibility of using alternate manure treatment technology with Conservation and Water Stewardship Minister Gord Mackintosh six months ago, but have not received a response, Dickson said.
Mackintosh was unavailable for comment, but in an emailed response his spokeswoman indicated that, “we are currently at work with Maple Leaf to examine options that will strengthen Maple Leaf’s plant and also protect Lake Winnipeg. We are committed to a balance approach that allows for a sustainable hog industry and protects our rivers and lakes.”
Even with hog prices on the upswing, Dickson said it will takes years for producers to rebuild capital. Likewise, even if the digester requirement was lifted today, it would be more than a year before the first new barn was completed and shipping pigs.
“It’s a trap we’re stuck in, a financial trap,” said Dickson.