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Farmscape Staff
Farmscape Article 3011 November 8, 2008
In the wake of the September 30 introduction of U.S.
Mandatory Country of Origin Labelling pork producers
and processors on both sides of the Canada-U.S. border have begun what has
turned into a the painful adjustment.
Regulations developed by the U.S. Department of Agriculture
(USDA) provide for the use of four labels. Label A, “Product of the United
States” designates meat from animals born, raised and processed exclusively in
the U.S.; Label B, “Product of the United States and Canada” or “Product of
Canada and the United States” designates meat from animals born in Canada and
partially raised and slaughtered in the U.S.; Label C identifies meat from
animals imported for direct slaughter; And Label D identifies meat imported
from another country.
“We’ve seen a series of events unfold in the last month,
starting with the position that the major
Several of the major U.S. pork processors, most notably John
Morrell in Sioux Falls, South Dakota have responded to the new rules by
announcing they will no longer kill Canadian origin pigs and, in the case of
John Morrell, effective September 30.
That has forced Canadian slaughter hogs that had been moving
into the
Slaughter Hog Movement South Plummets
“You’ve seen the number of butcher hogs that are going into
the
“From the butcher hog perspective it’s forced those of us
that were exporting hogs into the
David Hamblin, the marketing manager with Phoenix Agritec, agrees.
“With John Morrell being so competitive over the years it
hurt to lose that price. For a lot of the contract guys it was higher than even
what they could get on a Maple Leaf price.”
Phoenix Agritec has been shipping
primarily slaughter animals into the northern
Canadian Plants Handle More Hogs
Hamblin acknowledges, Canadian prices have held and, with
Maple Leaf increasing capacity at
He concedes some plants are discounting the pigs, some
aren’t and, in a lot of cases, it’s a matter of freight to find some of those
plants.
He adds, “There’s some pigs moving
west into some of the other packers that have been short for some time. Other
than that there’s some of the smaller second tier
packers in the states that are taking the pigs. It’s just a matter of trying to
keep the prices as competitive as possible.”
Limited Capacity Forces
Mohr adds, while Manitoba Pork Marketing has retained some
Canadian Weanling Producers Lose
Steinbach area weanling producer Rick Bergmann explains,
“Producers who once had standing agreements with weanling buyers are finding
themselves without contracts right now.”
He says, “Since last March there’s been a tremendous amount
of the sow base going to slaughter. In some instances, barns are being left
empty for a long period of time and possibly for good. You’re seeing five year
old barns, significantly sized barns, that are
depopulating because of the economics.”
Bergmann estimates a minimum of 10,000 to 15,000 sows have
been depopulated within the last month in
After examining their options, Mohr explains, one of which
was to find finishing spaces and have the animals slaughtered in
“When you look ahead to getting them slaughtered in
He acknowledges, many remain
hopeful that they will ultimately be able to re-populate and resume shipments
to the
Bergmann adds some producers are thinking they can
repopulate next year and sell the isoweans into a
2010 market. He believes that is the only option for those producers with newer
built facilities because of the cost of the barns.
The impact of COOL has been less pronounced in
“Because
He notes most of the remaining producers decided some time
ago to solidify their contract bases with Springhill, with Maple Leaf in
Tight Capacity Leaves Little Margin for Plant Slow
However, Hrapchak acknowledges,
there are occasionally
His concern is with the bottleneck that will be created when Canadian processing plants experience break downs or when processing slows during holidays.
“In the past we’ve been able to utilize the large slaughter
capacity of the
Mohr agrees, “The real pinch for Manitoba butcher hog
producers is going to come during the holiday shortened weeks, one of which we
have next week with Remembrance Day. Then, if we look ahead into Christmas,
we’ve got the potential for our major processors to be down almost four days
during those weeks over Christmas and New Years.”
Producers Advised to Work With
Canadian Processors and Stay Current
Manitoba Pork Marketing is advising producers to get as
current as they possibly can.
“We can’t go into that Christmas period with any kind of a surplus
inventory because it’s just going to exacerbate the situation,” says Mohr.
Phoenix Agritec is also advising
producers to strengthen their relationships with the Canadian packers.
“The success of our industry is very dependent on the
success of our Canadian packing industry up here,” Hamblin suggests. “It’s
definitely looking good compared to what it was. With Maple Leaf getting their
expanded double shift rolling and with Hytek building
in Neepawa and kind of getting into their new role,
it is looking good for our Canadian industry. And, in the last few weeks,
having the dollar move down into that 80 to 85 cent range has all of a sudden
placed us, as a Canadian industry, in a lot different position than we were
just a month ago with a par dollar.”
Longer Term Outlook Somewhat Brighter
Despite the immediate uncertainty many there is hope that
Canadian hogs will ultimately make a return to the
Mohr points out many on both sides of the border believe the
American processors will ultimately ease their position on purchasing Canadian
origin pigs, particularly next spring when supplies are typically a little bit
light.
However, he acknowledges, there are others that believe, as
was witnessed with the cattle industry when Canadian cattle were restricted
from flowing into the
Hamblin is convinced, “There still are going to be options
for moving pigs to the
2009 Offers Hope
“I think producers are looking forward to 2009,” says Hrapchak.
“We are looking at hog prices hopefully moving into the
profitable area. Feed grain prices are starting to come down. That will allow
prices in the $160 to $180 range to become profitable. Most of the producers
who are remaining in the business desperately need those profitable periods in
order to start to regain some of the lost equity that they’ve suffered during
the past two or three years.”
Hamblin expects a number of changes back and forth during the U.S. Department of Agriculture’s six month period of outreach and education.
“Realistically the number of pigs coming to market is going
to have a big impact on how packers choose to deal with it. As
numbers, especially out of
Staff Farmscape.Ca
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Perry Mohr -
Farmscape for November 10, 2008 (Episode 3012)
The Manitoba Pork Marketing Co-op remains hopeful that, over
time,
The introduction of U.S. Mandatory Country of Origin Labelling has prompted several major
Manitoba Pork Marketing Co-op CEO Perry Mohr says, as a result, many Canadian weanling producers have de-populated their breeding barns.
I think many of them looked to see what their options were, one of which was finding finishing spaces and
finishing them out and getting them slaughtered in
So these producers have chosen to empty their barns.
I think many of them feel that, long term,
they should have some potential to start those barns back up and start shipping
hogs into the
And that may be the case down the road.
I believe and I think many in the industry believe and even some of our American counterparts believe that, over time, the American processors, particularly next spring when supplies are typically a little bit light, and based on all of the inventory reports that they will be lighter than normal heading into next spring, that the U.S. packer will find a way to deal with these Canadian pigs and this won't be nearly as much of an issue as it is today.
Mohr notes there are those who believe that, as was
witnessed with the cattle industry when Canadian cattle were restricted from
flowing into the
He says some people feel that's possible on the hog side as
well and that we may see some processing capacity disappear in the
For Farmscape.Ca, I'm Bruce Cochrane.
*Farmscape is a presentation of Sask Pork and Manitoba Pork Council
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