“We’ll make it through again.”
– KARL KYNOCH, MPC
There’s a long pause after Marg Rempel is asked how she managed to get through the last 12 months as a hog farmer.
“I’m not even sure how to answer that question,” she finally says.
Rempel is a survivor of what Manitoba hog producers like to call the perfect storm: a combination of low prices, high costs, a strong Canadian dollar, a hog barn moratorium and U. S. trade barriers. It’s the worst industry downturn in recent memory.
Survival is all hog producers can manage these days as they enter the third year of an economic crisis with no real end in sight.
Lots of Rempel’s fellow producers – she isn’t sure how many – have emptied their barns and mothballed their operations. Rempel is scraping by. She has shaved costs to the bone and increased her debt load by 50 per cent over the past year. She produces and mills her own feed. She recycles hog manure back onto the land.
But her savings are gone. So is her retirement. She lives on $600 a month after expenses.
Rempel, who began hog farming near Ste. Anne with her late husband Ron in 1975, has plenty of company.
No one knows exactly how many hog farmers have closed their barns and exited the industry in the last year. But there’s no question that conditions have resulted in fewer producers and fewer hogs, not just in Manitoba but nationally.
According to Stat ist ics Canada, the number of farms reporting hogs throughout the nation fell 14 per cent between January 1, 2008 and January 1, 2009. The total number of hogs in that period declined 10.2 per cent. Sow herd reductions in all provinces lowered the national breeding herd by 8.3 per cent (6.3 per cent in Manitoba).
The economic impact of those losses is difficult to calculate. But figures released at last week’s Manitoba Pork Council annual delegate meeting in Winnipeg suggested the province’s hog industry lost $250 million in 2008.
Agriculture and Agri-Food Canada statistics say average net farm income for hog farmers in 2008 was a negative $3,517 after receiving $119,945 in program payments. Family income on hog farms averaged $28,010 including $31,527 in non-farm income.
There are a few positive indicators. Many of the conditions which have produced 2-1/2 years of negative returns have moderated. Rapidly rising exchange rates have eased. Feed, which makes up over half of a hog producer’s costs, is no longer as expensive. Futures markets are signalling a return to profitable hog prices, perhaps later this year.
But other problems have moved in to replace them. The global economic crisis is producing a credit crunch. Dampening demand for pork affects consumption at home and exports sales abroad. Above all else looms the U. S. country-of-origin labelling rule, which threatens to shut down live hog shipments to American packing plants.
What is most frustrating to Karl Kynoch, Manitoba Pork Council chairman, is that while pork producers go broke, retailers charge more for the product.
Kynoch told the annual meeting that in 1982, four years after he began raising hogs near Baldur, pork chops in the store were $2.10 a pound. In 1998, the year of a sudden hog market crash, those chops cost $3.95 a pound. This year, they’re $4.21 a pound.
Last weekend, Kynoch received a receipt for $18.87, the total returns for a shipment of 18 sows.
But Kynoch wasn’t all doom and gloom. He reminded delegates that producers have weathered similar storms, such as in 1982, when interest rate on operating loans topped 20 per cent. Or 1998, when prices were so low some producers received bills for shipping sows and boars because prices didn’t cover freight costs.
“We’ll make it through again,” Kynoch said.
Andrew Dickson, Manitoba Pork Council general manager, said there are reasons to be optimistic. The price cycle has likely bottomed out. The large sow liquidation which has just occurred means supply is down and prices should go up as a result. The Canadian dollar has fallen back to around U. S. 80 cents, making exports more competitive. Upgrades at the Springhill Farms plant in Neepawa and a second shift at Maple Leaf in Brandon create more opportunity to slaughter hogs at home.
Longer term, Dickson stressed the need for lower feed costs to make Manitoba hog producers cost competitive with their American counterparts. That, in turn, should increase the capacity for finished hog production, provide new markets for wean-ling producers and drive the need for more slaughtering and processing capacity, he said.
Marg Rempel knows another reason to keep going. That’s personal satisfaction for a job well done. Every time she goes into the barn, she’s surrounded by happy, healthy pigs. Her product is top quality. Even the animals seem to know it. [email protected]