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This article was published 1/6/2011 (3433 days ago), so information in it may no longer be current.
Hog prices are finally rebounding enough after about three years in the tank to give producers a little profit.
Statistics Canada reported Wednesday that year-over-year prices in March were up a solid 15 per cent.
But at the same time, producer costs are going way up as well.
A recent U.S. Department of Agriculture report noted an 85 per cent increase in corn prices compared with the first quarter of last year.
On top of that, when it comes to the export market, the Canadian dollar is cutting a few more points off the bottom line.
But global demand is going up and for the enterprising Manitoba swine genetics operation called Genesus Inc., the scenario has created some unique opportunities.
The thing is, those "opportunities" are far afield -- in Russia and China to be exact.
"Prices have recovered in North America, but costs are at an all-time high," said Mike Van Schepdael, executive vice-president and one of the founders of Genesus.
Van Schepdael and other managers from the Oakville operation were in Ottawa Wednesday at the first Canada-Russia Livestock Forum where they announced a $5-million deal to ship 4,200 registered purebred swine to Russia to grow a business there with a Russian partner.
Now that the population in Russia and China can afford better diets, those countries have growing challenges in feeding their population.
"Canada is probably one of the toughest places in the world to raise hogs," Van Schepdael said. "With our dollar so strong it really hurts Canadian producers. But the good news for us is that we are getting into these export markets."
Last Sunday, Genesus loaded 800 registered purebred gilts and bores into a China Cargo Airlines Boeing 747-400 at the Winnipeg airport headed to China.
Over the next several weeks it will be shipping seven planeloads to Russia.
In Ottawa this week, the company was held out at a Canada-Russia trade event as an example of a Canadian company capable of grabbing those opportunities.
For Genesus, the Chinese and Russian markets are crucial. China produces about 50 per cent of the world's pigs and Russia is the market with the largest opportunity as it works toward self-sufficiency in meat production.
Genesus didn't land these big orders overnight. It was the culmination of many years of developing the market. Over the past three years it has shipped about 11 planeloads of swine to Russia.
It is an expensive and risky proposition. Van Schepdael said it costs close to $500,000 a shipment.
Nancy Weicker, an official at the Canadian Swine Breeders Association based in Woodstock, Ont., said on top of all of the regulatory matters that have to be dealt with (including a 30-day quarantine period on landing), breeders have to worry about weather, delays and the general health of the animals on the trip.
That's why the Russian deal is such a breakthrough for Genesus. Instead of having to incur the heavy investment and risk in selling breeding stock to overseas customers, it will now be able to build a business in southern Russia to produce purebred sows that will form the nucleus for meat production herds in Russia.
The company is starting to develop the same kinds of relationships in China.
Although there are not many companies like Genesus -- there are only 14 other hog genetics operations in Canada -- it is also a great example for other Manitoba companies.
"The company can enhance its presence in Russia and the region," said Gustavo Zentner, Canadian Manufacturers and Exporters' Manitoba exporting consultant.
"Equally important, I trust other Manitoba producers and manufacturers will pursue opportunities that global markets present for our local economy."
But Zentner knows that small- and medium-sized Manitoba firms often don't have the expertise and resources required to pursue and secure international sales.
He says strategic alliances and accessing local flavour with the business acumen needed for the targeted markets is the way to go.
Canada is one of the Top 3 swine breeding stock exporters in the world and Genesus' swine command a premium price.
"Canada is perceived as a brand of positive association," Zentner said.
"In many markets Canada is perceived as a place with technical expertise, and a place with a high regard for the law and the environment."
Genesus is one of those companies that has figured out how to exploit that advantage.
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.
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