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Perfect storm hits hog producers

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A record drought in the U.S. and eastern Canada which has driven up the price of feed grain was the final nail in the coffin for some Manitoba hog producers.

The hog industry’s desperate situation was highlighted with the recent announcement by Puratone, one of Manitoba’s three largest hog producers, that the company is seeking creditor protection.

"We see what is happening with Puratone and it’s a big story because it’s a bigger operation, but there are many, many small farm operations that are experiencing the same set of disastrous circumstances and are just quietly fading away," said Keystone Agricultural Producers president Doug Chorney.

Manitoba’s pork industry is expected to lose between $ 130 and $150 million during the next six to eight months.

Manitoba Pork Council chair Karl Kynoch said government-backed financing is required to bridge the cash crunch until producers can get back to profitability, possibly next summer.

The Starlight Colony near Starbuck is faring better than some producers thanks to its ability to provide much of the feed used in its 600-sow farrow-to-finish operation.

Starlight pig boss James Hofer said the colony had a good cereal crop this year and also grew soybeans for processing in its soymeal plant.

"We don’t have control over the markets, but we do have control over our input costs," he said.
This year has been in stark contrast to last year when a cereal crop failure meant that the colony had to import 90% of its feed grain from Saskatchewan.

Hofer said American and Canadian governments’ commitment to diverting feed grain and corn into the ethanol industry, along with more provincial regulations on the hog industry, are making a bad situation even worse for producers.

"We’ve hardly had a chance to adjust to one (regulation), and we’re hit with another one," he added.

Manitoba’s hog industry was once a shining light, with increasing pork exports to Asian markets and livestock trailers full of weanlings heading south across the U.S. border to be finished by American companies.

Manitoba Pork Council spokesman Arne Thorlacius said that the current crisis has been brewing for the past five years as Canadian hog producers were negatively affected by American country-of-origin labeling regulations, the higher Canadian dollar driving up the cost of Canadian hogs and pork for importers, the threat of swine flu and recent higher feed prices.

Thorlacius said there are about 630 sites registered for hog production in Manitoba, with more than half of them paying levies to the council. Some producers raise hogs under contract for companies such as Puratone.

While some of Manitoba’s hog producers run farrow-to-finish operations and sell off their finished hogs, about one-third of the council’s levy payers have breeding sows and sell weanlings to be raised by another company. Approximately three million weanlings were sold to the U.S. last year.

Thorlacius said this once-lucrative market has completely dried up because American companies cannot afford to buy the feed needed to finish the pigs after corn and cereal crops across the Midwest were a write-off due to drought.

With no market for weanlings, Manitoba farmers are being forced to sell their breeding sows — a move that almost guarantees their permanent exit from the industry.

"Once you depopulate the sows, it’s unlikely that you will come back," Thorlacius said.

A provincial government spokesperson said in a statement: "Manitoba is very concerned with the recent difficulties of the Canadian hog industry. We are pleased that the federal government has appointed a Hog Industry Task Team to monitor the current situation. We will maintain our close contact with the federal government, our provincial partners and the hog industry in the coming weeks.  It is important that any actions taken by the industry be consistent with our international trade obligations."

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