No one wants to rejoice in their neighbours’ suffering — or at least no one admits to it — but the ongoing PED outbreak south of the border has undoubtably aided Canadian hog producers.
Speaking at a Farm Management Canada’s Agriculture Excellence conference in Winnipeg, J.P. Gervais said that the continued presence of the porcine epidemic diarrhea virus in the United States has boosted the value of Canadian hogs.
“We were sort of fortunate to have PED in the U.S.,” said Farm Credit Canada’s chief economist. “We did the right things, and maybe there was a bit of luck involved, but the bottom line is we were less impacted, way less impacted than the U.S. was and that actually contributed to really large margins in the hog business.”
But he cautioned that the high prices producers are currently seeing won’t last forever.
Eventually, hog prices will return to historical averages, Gervais said.
When that might happen will depend in part on when producers in the U.S. are past the PED crisis and able to focus on rebuilding stocks.
“Will see after the winter months where we sit, especially the United States,” he said.
However, while the presence of PED in the U.S. has helped expand margins in the hog business, it was not the sole factor, said the economist.
Hog inventories in the U.S. had actually started to decline before the virus hit American farms.
“It would have been a good year last year for hogs, even without PED, no doubt,” Gervais noted.
And even though the PED outbreak is continuing south of the border, profit margins are beginning to decline, albeit slightly.
If futures contracts are any indication, hog prices and profit margins should remain strong for the next 12 months. After that, much could change, including the cost of inputs like feed, he said.
“But right now the futures are suggesting that the margins are going to be really good,” he said.