A receivership order filed June 12 in the Court of Kings Bench in Winnipeg has appointed BDO Canada Limited as receiver and manager for Genesus Inc., Genesus Genetics and Can-Am Genetics, Inc.

Genesus Inc., and Can-Am Genetics operate out of Oakville, Man. Genesus Genetics Inc., is incorporated in South Dakota, court records show.

According to an affidavit filed by a Bank of Montreal representative, the bank held mortgages for Genesus and Can-Am and had a payment guaranty agreement with Genesus Genetics Inc.

In mid-2023, BMO served notice that it intended to pursue enforcement action after repayment obligations were breached. Those actions were stayed in September 2023, when BMO agreed to delay enforcement under certain forbearance conditions. That forbearance agreement expired Jan. 15, the affidavit said.

Genesus bills itself as “the world’s largest independent producer of high health registered purebred swine in the world owning over 80% of all registered purebred breeding stock in Canada,” says the company’s website.

According to court records, Genesus had approximately 61 employees at the beginning of the year and about 17,700 hogs. Can-Am Genetics had approximately 13 employees.

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If you are in the red, you must have been working at it, Cam, because, by my probably incomplete reckoning, your industry has been on the receiving end of more than $100 million in government (corporate welfare) assistance since 2000! 

Because of this fact, your next claim that “government’s most frequent policy tool is regulation,” is not only incredibly inaccurate, but downright ungrateful. After all, without those tax dollars, how would you be able to brag about the number of jobs you’re creating or the numbers of new schools and hospitals you take credit for? 

And whining about the (refundable) carbon tax is pretty rich too. Despite your attempts to muddy the waters over the emissions you produce, they continue to go up. That’s because you stubbornly refuse to implement best management practices such as manure composting, or even ones that might alleviate the suffering of the hogs like (kinder, gentler) open, straw-bedding systems. 

I know you will not answer this, since your sector has long since retreated to a comfortable nest where, hiding behind the motherly skirts of your government enablers, you remain unaccountable, operating with virtual impunity. 

But here it goes anyway. 

Apart from the (refundable) carbon tax, what regulations are you finding especially onerous, especially in a province that’s been basking in the heady aura of “red tape reductions” and “right to (factory) farm” legislation brought in by governments on both the right and the left in this province for over half a century? 

Be specific, Cam. I’m holding my breath (not really) for your answer. 

Larry Powell, 
Shoal Lake, Man.

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“We have to think about all the other surfaces in the barn that the pig can be in contact with for conduction, or just exposed to,” said North Carolina State University swine specialist Suzanne Leonard.

For instance, barns might need to be warmed well before pigs are brought in.

“If you’re going into your facilities an hour or two before the truck arrives, it’s not going to be enough,” said Leonard.

Concrete surfaces like slats can take four to 14 hours to warm up to the proper temperature.

Leonard, who spoke at the Manitoba Swine Seminar earlier this year, said pigs can be affected by various floors, walls, drafts from windows and variations in airflow.

An air temperature gauge won’t register the impact of a cold concrete floor or heat radiating off walls and windows, she noted. That can lead to pigs either eating too much to stay warm or going off feed because they’re too hot, all while the thermometer reports that everything within the barn is fine.

Leonard said producers sometimes don’t realize how long it takes to get the barn’s ambient temperature to the right level. Air can be heated or cooled quickly, but solids take longer to equalize.

“Don’t get too attached to a number,” cautioned Leonard.

Instead, observe the pigs for symptoms of temperature extremes.

“We want them to be sort of lying like sausage links,” she said about resting pigs.

Side by side and about a pig-and-a-half deep is a happy situation for most pigs, which are social animals. If they’re spread out too widely, not touching each other, they’re likely too hot. If they’re piled three deep, they’re probably too cold.

Beyond temperature, airflow and quality are important for hog production. Poor air can cause a number of problems.

High humidity can be a health threat for both humans and pigs and can degrade barn structure. Dust is similarly threatening for people and pigs. Gases such as ammonia can also build up and become a health risk.

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It is difficult, even impossible, to change farming practices aimed at improving environmental sustainability when experiencing negative margins. That idea applies to every kind of business.

Even though this seems obvious, it is not always recognized by governments. Governments’ most frequent policy tool is regulation. Imposing costly restrictions and penalties on businesses is often the default action.

That shouldn’t be the case.

Take the carbon tax, for example. The stated policy objective is to reduce carbon emissions by discouraging the use of fossil fuels. This may work when the use of fossil fuels is a discretionary expense, but heating a hog barn in winter is not discretionary.

For hog farmers, energy costs are the second-highest operating expense after feed. At a time when farmers’ margins are written in red ink, the carbon tax is making it more expensive to raise pigs.

This is antithetical to the policy objective of reducing greenhouse gas emissions, because farmers are more likely to take on innovative business practices when their operation is profitable. The carbon tax has become a barrier to adoption of innovation that could improve environmental sustainability.

The carbon tax is also making Canadian hog farmers less competitive internationally. Manitoba exports 90 per cent of the pigs raised in the province every year, either as live animals bound for the United States or as packages of pork exported around the world.

Canadian farmers are competing against producers in other countries who do not face the added cost of the carbon tax. The reduction in our competitiveness impacts jobs in both urban and rural areas, which in Manitoba equals 22,000 jobs across the province, and discourages investment in every link of the industry’s value chain.

To summarize, when applied to the energy requirements for raising pigs, the carbon tax does not achieve its policy goals and it inhibits the adoption of alternative business practices that may improve sustainability, all while decreasing the competitiveness of Canadian farmers in world markets.

The cost and ineffectiveness of the carbon tax when applied to farming operations was recognized by the member of parliament who introduced bill C-234, “An Act to Amend the Greenhouse Gas Pollution Pricing Act.” This legislation, which was supported by a majority of MPs, would remove the carbon tax from essential agricultural operations like heating a barn in winter.

Unfortunately, the Senate disagreed and amended the legislation, removing the reference to barn heating.

How much will this change cost Canadian farmers? The Parliamentary Budget Office estimates this cost to be $910 million annually.

There is a better way. Not all government policy objectives need to be met using a regulatory hammer, as is being done with the carbon tax. Instead, governments should be adopting an incentive-based approach. The alternative policy approach is one rooted in collaboration with farmers and accepting that financial sustainability for producers must be at the foundation of any strategy.

The collaborative approach may not appear to be the easy path for those who are charged with implementing government policy.

Canada is a large, diverse country and innovative practices that drive fiscal and environmental sustainability in Quebec or the Maritimes or British Columbia may not work on the Prairies. The approach must have enough flexibility to account for differences in climate, soils and ecosystems across Canada.

Provincial and local governments need to be engaged when determining which new practices and technology will work in a specific region.

While this may sound messy and complicated when compared to a one-size-fits-all regulation, in the long run, it is incentives and collaboration, instead of costly regulations, that will deliver meaningful results.

The federal carbon tax is set to increase again on April 1. If this happens, Canadian farmers will be a little less competitive internationally and see a little bit more red ink on the bottom line. It does not have to be this way.

– Cam Dahl is the general manager of the Manitoba Pork Council, which represents the province’s pork producers. 

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Big agribusinesses in the world’s top pork producer have modernized farms and expanded pig herds so rapidly in recent years that a downturn in demand led to plummeting hog prices, mounting losses, and rising debt last year.

Farmers lost an average of 76 yuan (CAD $14.29) per hog in 2023, Lei Liugong, director of market and information technology at the ministry, said in a press briefing.

As a result, struggling producers sped up slaughter of pigs late last year to cut their losses, raising the country’s pork production to a nine-year high of 57.94 million metric tons.

Lei said the sow herd at end-December was down 2.5 million head from a year ago to 41.42 million head.

But herd numbers are still high and thus destocking will continue in the next one to two months, continuing to depress prices, he said.

The fall in the number of breeding sows will help the market recover in the second quarter of the year, he added.

To accelerate the return of supply and demand to equilibrium, the ministry will guide farms and households to reduce production capacity and fatten pigs at the right time, Lei said.

At the same briefing, Chen Bangxun, the ministry’s director of the development planning department, said there is room for China to continue reducing the amount of high-protein soybeans used in livestock feed.

The current proportion of soybean meal in feed formula fell to 13 per cent, down 1.5 percentage points from 2022, which is equivalent to a reduction of about 9 million metric tons of soybean consumption, Chen said.

Soybean demand in the world’s largest importer is largely driven by the livestock industry as the beans are crushed into meal for animal feed.

China, aiming to reduce its soybean imports, has promoted low-protein feed diets, and the use of oilseeds, leftover food and animal carcasses for feed.

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Farmers and their representatives need to get this question right. Sometimes, agriculture’s asks can be counterproductive both for the development of a positive relationship with governments and the longer-term fiscal sustainability of the sector. A key starting point should be a focus on the foundations of good long-term policies and not just short-term crises.

What are the policy foundations that will generate long-term growth and help realize the opportunity agriculture has to offer?

The first, and arguably most important, ask is a recognition that agriculture is one of the most important sectors of the economy. Agriculture is a source of employment, investment and income in both rural and urban areas, with over eight per cent of Manitoba’s GDP coming from agriculture. Hog farming and pork processing alone account for over 22,000 jobs in Brandon, Neepawa, Winkler, Winnipeg and more of our rural areas and urban centres.

Agriculture cannot be an afterthought for economic policies, nor can potential negative impacts from policy areas outside of agriculture, but affecting the sector, be ignored. Supporting the growth of agriculture and the value-added businesses attached to it should be front and centre for each cabinet minister.

The potential for investment and growth is almost unlimited if this mindset is maintained.

Most farmers in Manitoba depend upon international markets for sales opportunities and price determination. Taking the hog industry as an example, 90 per cent of Manitoba’s annual production is destined for international markets.

Concerningly, the world is becoming more protectionist, including the United States, our most important trading partner. Both major U.S. political parties are trending toward “America first” policies and away from free trade.

Examples of protectionist policies that threaten our exports include the revival of country-of-origin labelling and individual state legislation that is fragmenting the U.S. market, for example, Proposition 12 in California.

Preserving the market access of both farmers and processors needs to be a key priority for both our provincial and federal governments. Agriculture needs our governments to demand that our trading partners live up to the agreements that are in place, including the recognition of Canada’s science-based food safety and animal welfare laws. Governments also need to be partners in communicating the benefits of free trade to consumers and policy makers on both sides of the border.

Sustainability is a top-of-mind issue for much of the voting public. This is why environmental sustainability is a cornerstone of many government initiatives.

Farmers do not stand apart from the public when it comes to sustainability. Producers are striving to ensure that the land and water are healthy and productive for generations to come.

This is why farmers are asking governments to recognize the continuous improvement in sustainability of agricultural production in Manitoba. It will be far easier for policy makers to engage with farmers on their sustainability journey if there is recognition of how far we have come.

For example, Manitoba’s robust manure management policies treat manure as a valuable organic nutrient and limit the leaching of nutrients into surface water. Ninety percent of hog manure in Manitoba is injected below the soil surface or immediately incorporated into the soil to prevent runoff.

Hog manure is only applied after soil nutrient levels are determined, manure nutrition is sampled and is only applied to meet the demands of the intended crop.

Directly related to the need to recognize how farmers are contributing to sustainability is a request for governments to commit to advancing sustainability through a collaborative model, not a punitive regulatory approach. Regulations imposed without the collaboration of the agricultural community will meet resistance.

This resistance comes because punitive regulations impose costs that make Manitoba’s farmers less competitive. These extra costs cannot be offset or recovered, because farmers’ revenue is determined in international markets where our competitors do not face the same regulatory burden.

Collaborating with farmers by encouraging innovation that will improve both fiscal and environmental sustainability is a more effective approach in the short and long run. For example, offsetting the risk taken on by early adopters for more energy-efficient barns or increased nutrient utilization will be effective in advancing societal goals and make our industry more competitive.

Agriculture has the potential to further drive Manitoba’s economy, bring investment to our province and develop our communities. The right approach to collaborative policy development, legislation and regulations will help make the potential a reality.

– Cam Dahl is the general manager of the Manitoba Pork Council.

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Olymel, the agrifood arm of Quebec’s Sollio Cooperative Group, announced Friday it has served 80 employees with layoff notices at five sow units in Alberta and one in Saskatchewan.

The unit closures — Pinnacle 1 and 2, Dynacrest 1 and 2 and Smoky Sow/Dev in Alberta, and Olysky’s Kelsey unit in Saskatchewan — will reduce Olymel’s company-owned sow herd in Western Canada to 40,000 sows, down from 57,000, the company said.

That reduction is expected to translate to a net production cut of about 200,000 company-owned market hogs per year.

Olymel said the impact of that supply cut on operations at its hog slaughter plant at Red Deer, Alta. “will not be felt until 2024 at the earliest” and would depend partly on hog supply availability from independent producers.

The company didn’t give a hard date for the closures in its release Friday, but said the affected sow barns’ operations will be wound down “over the next several months” and the barns will stay closed “until market conditions improve.”

READ MORE: Meat industry hits hard times

“Over the past two years it is well documented that Olymel has experienced significant losses in the processing of fresh pork as a result of limited market access globally,” Olymel CEO Yanick Gervais said in Friday’s release.

“Now, coupled with stubbornly high feed costs, resulting in unprecedent losses in the hog sector, we have little choice but to retract and position ourselves for success in the future when conditions improve.”

Olymel’s fresh pork business in Western Canada took a hard hit in the company’s 2022 fiscal year, largely from “higher grain, labour and transportation costs, as well as the closure of the Chinese market in the first three quarters of the fiscal year for a second consecutive year.”

In Sollio’s fiscal 2022, its Olymel division alone booked a loss, before income taxes, of $445.7 million for 2022, following a $71.8 million loss for 2021.

Olymel had already been in deep cost-cutting mode for months. Last fall it cut dozens of administrative and management positions through attrition and layoffs, and since then has permanently closed three pork further-processing plants in Quebec.

After announcing it intended to reduce its total hog slaughter, Olymel last month reported it will permanently close its hog slaughter plant at Vallee-Jonction, Que. by Dec. 22.

Olymel and other packers operating in Quebec last month also announced a new supply deal with that province’s hog producer organization, les Eleveurs de porcs du Quebec.

To reduce the effects of the Vallee-Jonction plant’s closure on Quebec hog producers, EPQ said at the time, the new deal calls for Olymel specifically to cease buying market hogs from neighbouring Ontario.

Olymel’s remaining hog slaughter plants in Canada include the facility at Red Deer and its plants at Princeville, St-Esprit and Yamachiche, Que. — Glacier FarmMedia Network

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“As pork producers, we love the trade,” said Aaron Juergens, an Iowa hog farmer and director with the Iowa Pork Producers Association.

Why it matters: Manitoba’s livestock sectors vividly remember the years-long fight against VCOOL’s mandatory predecessor.

Juergens spoke alongside Manitoba Pork Council chair Rick Préjet and John Anderson, a Minnesota pork producer and president of the Minnesota Pork Producers Association. The trio formed a producer panel at Manitoba Pork’s annual meeting in Winnipeg April 13.

Juergens and Anderson updated the group on developments in voluntary country of origin labelling requirements (VCOOL), and on a U.S. Supreme Court battle over California’s Proposition 12, commonly referred to as Prop 12.

In March, the Biden administration proposed rules that would require any meat, poultry or eggs labelled as a U.S. product to be raised and slaughtered in the country, not just processed.

Previous mandatory country of origin labeling (COOL) made American buyers shy away from Canadian animals as they were forced to segregate them from American ones. The concern is that VCOOL could have similar effects. Deliberations over the rule are ongoing.

COOL was repealed in 2015 following years of dispute brought before the World Trade Organization by Canada and Mexico against the U.S.

While American cattle groups have cheered VCOOL, hog groups aren’t on board, Anderson and Juergens said.

The support is “not coming from producers. It’s coming from more the people who want to know where their food is coming from,” Anderson said.

From their point of view, they can’t afford disruptions in shipment of Manitoban isoweans, Juergens said.

The Iowa Pork Producers Association isn’t hearing that grocers want to use country of origin labels, said Pat McGonegle, the organization’s CEO. However, these are regional chains.

In response to a question from the floor, McGonegle encouraged Canadian groups to get involved in advocacy in the U.S., and engage with the National Pork Producers Council and American farmers with whom they have relationships.

Prop 12

Controversial California Prop 12 remains before the Supreme Court, but hog groups are gearing up for a further fight, Manitoba producers heard.

The American pork industry sued California for the 2018 initiative, which saw sale of pork, veal and eggs barred in the state unless it came from animals housed according to California’s space requirements. For hogs, that meant sows must have a minimum of 24 square feet of living space, according to California Department of Food and Agriculture documents.

Manitoba exports millions of weanlings to the U.S. each year. If Prop 12 stands, there is concern those exports may decrease because Canadian housing standards don’t comply with California’s requirements.

At least a dozen states have similar bills that will automatically come into effect if Prop 12 passes at the Supreme Court, Juergens said.

“This is just the start,” he said. “It’s somewhat scary.”

“I worry about our state,” added Anderson. “If they [animal welfare activists] could pull something off in the No. 2 hog-producing state in the country, I think that would be a big win for them.”

The current state government seems unfriendly to hog producers, he said. Groups are getting their war chests ready for a fight.

Juergens estimated that American farmers raise enough hogs to meet California’s needs and requirements, but barns will need to be upgraded if other states apply the same standard. Anderson said that suggestion was optimistic.

When asked if the market was trending toward more open housing anyway. Juergens said that in his opinion that serves a niche market but most consumers simply want cheap, nutritious and delicious pork.

In 2014, codes of practice published by Canada’s National Farm Animal Care Council gave the sector until 2024 to transition barns to open sow housing. In 2020, the results of a five-year review proposed extending that deadline to 2029. After a public comment period, however, the committee responsible for amending the pig code could not agree on changes. The council’s board later decided that changes would be “temporarily set aside pending NFACC undertaking a full review of its governance processes,” the organization’s website states.

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It was a year of uncertainty. We saw disruptions to supply chains and reverberations from COVID-19. The war in Ukraine impacted markets and African swine fever jolted traditional supply and demand.

Will 2023 be any better? Many of the market disruptors from last year will continue. However, this year, we can see these uncertainties in advance and mitigate some of the associated risks.

The war in Ukraine will continue to cause significant disruption, resulting in high feed prices and price instability. What will the price of corn or soybean meal be in six months? If someone gives you firm answers to these questions, don’t believe them. Accurate prediction is challenging under current market conditions.

Impacts of COVID-19 continue to introduce volatility. As a result of the pandemic, we shifted from a logistics system that was “just in time” to one that is “just in case.” This philosophy increases the cost of inputs and pushes up the cost of getting pork to market.

There are also significant economic factors building uncertainty into the global demand for pork. Rising inflation, especially for food, will impact pork demand. The scale of those impacts is still an open question. Interest rate uncertainty and exchange rate volatility add to the inflation landscape.

There are other market impacts to consider. To what degree has China recovered from ASF and what will this mean for their pork demand? What about other ASF-impacted countries like Vietnam and the Philippines?

What will happen to European production in light of ASF pressure, escalating feed costs and restricted feed availability driven by the war in Ukraine?

Disease will continue to be a significant production risk in the year ahead. Will porcine epidemic diarrhea be an issue? Will porcine reproductive and respiratory syndrome enter Canada in a substantive way? Are there other diseases we should pay attention to?

Economics has been called the dismal science. It’s not hard to see why when reading this introduction to 2023, but the outlook is far from gloomy. The positive hog prices we see coming into the New Year have support.

Pork consumption, both at home and abroad, remains strong. Pork supply is tight internationally, with European production slipping, U.S. hog numbers on a downward trend and Asian production below average because of ASF.

However, risks and uncertainty are real, and risk management is critical to realizing positive potential and securing profitability.

Where should producers focus their mitigation efforts? Currency fluctuation is one area. Ninety percent of the eight million pigs produced in Manitoba are exported, either as live animals to U.S. feeder operations or as pork shipped around the world. All this production is priced in U.S. dollars.

International volatility, both financial and political, drives fluctuations in the spread between Canadian and U.S. currencies. If there ever was a time for producers to look for advice on protecting themselves from currency risk, 2023 is that time.

Long-term hedging of inputs makes sense for 2023. Forward feed contracts are one tool that can accomplish this goal. This may be an area where individual operations can benefit from third-party expertise.

The same comment applies to examining price protection for future hog production. This can be achieved through forward contracting with processors or using the futures markets. Again, there are professionals who provide advice on how best to manage anticipated volatility and mitigate risk.

Disease pressure is one of the biggest threats to profitability. We do have some control over this risk, even if that control is not complete. We can mitigate risk through rigorous adherence to biosecurity.

Animals brought into barns must be screened to be sure they are free of new diseases, as should feed. Pork producers also should restrict contact with the outside world through carefully limiting barn access to only those who provide animal care. Potential for exposure through ventilation equipment or loading facilities needs to be examined.

Together with the Canadian Pork Council, Manitoba Pork is offering biosecurity evaluations for producers. Plugging potential biosecurity holes is one of the most important risk mitigation efforts that producers can undertake to prepare for 2023 and beyond. I encourage producers to call and set up an assessment.

There are reasons to be optimistic for 2023, but there are also levels of risk and uncertainty that we have not seen before. Greater attention to risk mitigation, especially in terms of hedging input costs, hog prices and marketing conditions and reducing the risk of disease spread will reduce the downside margin potential and flatten volatility.

This is a year where that time and attention will be money well spent.

– Cam Dahl is general manager of the Manitoba Pork Council.

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Pork output in the world’s top producer of the meat reached 55.41 million tonnes, the highest since 56.71 million tonnes recorded eight years ago. The 2022 output compared with 52.96 million tonnes in 2021.

Output was boosted by high fourth-quarter production of 13.91 million tonnes, according to Reuters calculations of the data from the National Bureau of Statistics. That was up 0.87 per cent from the same year-earlier quarter despite a shortage of slaughterhouse labour due to COVID outbreaks.

Farmers have raised heavier hogs, hoping to benefit from an anticipated recovery in demand and prices, a factor that could have boosted output.

Demand had, however, remained tepid due to surging COVID-19 cases in China that kept many people at home, causing prices to plunge.

The data shows that China’s pork production has increased every quarter year-on-year for the last two years despite sluggish demand.

“I haven’t heard there’s much storage so it needs to be consumed already, which is difficult to explain,” said a livestock analyst, declining to be identified because of the sensitivity of questioning official data.

A rally in prices over the summer encouraged farmers to fatten pigs up more than normal to increase their profits.

Though it has declined, the average weight of live pigs was still on the high side at about 124.5 kg last week, according to analysts at Huachuang Agriculture.

That will continue to pressure prices, they said in a note published Sunday.

Meat consumption is set to improve after China’s reopening from a strict three-year COVID policy, with more group dining and business gatherings to support demand.

However, some believe pork consumption may not recover to the levels prior to China’s African swine fever outbreak that began in 2018, with many still cautious about crowded gatherings.

China’s beef output increased last year by three per cent to 7.18 million tonnes, the data also showed, while poultry output rose 2.6 per cent to 24.43 million tonnes and lamb and mutton increased two per cent to 5.25 million tonnes.

— Dominique Patton reports on agriculture in China for Reuters from Beijing.

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