ThePigSite.com - news, features, articles and disease information for the swine industry

News

Canada: Where We've Been; Where We Might be Going

14 October 2010
Genesus - The first power in genetics

CANADA - Canada like the rest of North America and several other pork exporting nations in the world has had extreme pressure on its pork industry in the last three years, writes Bob Fraser from Sales and Service at Genesus Ontario.

Many factors have contributed to this not the least of which has been the extended period of low equity draining prices. However this is been greatly exasperated by the weakened access to the US market due their MCOOL (mandatory country of origin legislation) but most importantly by the rapid appreciation of the Canadian Dollar.

In the period depicted in the chart below the Canadian Dollar has been below sixty five cents US till rising quite rapidly to par and beyond for a period till hovering just under par with the US dollar today. To put this another way the common transfer price and long term average cash price of $32 US for a SEW goes from $50 CDN to $32 CDN in this scenario. Even a Canadian Dollar at eighty cents US where we’ve been for extended periods results in the $32 US – SEW converting to $40 CDN. Although market access (MCOOL), the misnamed “swine flu” and greatly higher grain prices aided and aggravated the decline in the Canadian swine since its peak in the first quarter of 2005 the changes in our exchange rate to the US explains the most of it. Also it is highly debatable other than magnitude whether the scenario depicted in the graph would have been appreciably different in the absence of any of these other factors. The Canadian exchange rate has been and remains a huge driver for better or worse to the Canadian swine industry.

So given this what is the Canadian swine industry to do? Same message given to T. Rex (and apparently not listened to), “Adapt or Die”. The Canadian swine producer’s history shows him quite good at doing just that. His early embrace of quality genetics, high health, along with other technology long gave him an enviable production advantage over many other producers in the world particularly the US. No longer! The greatly improved communication and technology transfer globally has resulted in any technical competitive advantage to at best be fleeting.

Many Canadian swine industry leaders suggest our salvation comes from highlighting our quality pork and garnering a slight premium for it. A laudable goal for sure, but carving a niche for an entire nation’s swine industry is a big niche indeed. Perhaps a better path is for the Canadian industry to align its costs with the American producer. As a colleague says correctly “if we can’t compete with the Americans at par we can’t compete with them at all”. A deflated currency makes us all smarter but also often leads to taking one’s eye off the ball. Costs are important, but particularly benefits to costs. More pigs per sow are a tremendous driver in lowering costs and achievable through superior genetics coupled with sound management and nutrition. As with growing corn if you can figure out how to get 200 bushels per acre rather 150 bushels things tend to work out better.

We are seeing this move by the survivors of the Canadian industry to aligning their costs by demanding true demonstrable cost effective benefits to genetics, nutrition and all their other inputs. They are looking at acquisition of devalued assets to lower their cost structure. They are also reviewing structures that served them well in the past but went through a period of less favour. Farrow to finish, land based units although by no means the only model have proved quite resilient in these trying times. The “original integrators” of pigs to manure to land to crops and back again have seen their model vindicated and now appear at the forefront of sustainable agriculture.

The Canadian swine industry remains bright to those who are adaptable, innovative and resourceful. Probably the same skill set that has always propelled the success of the industry.


To find out more about Genesus Genetics, please take the time to visit their website at www.genesus.com .



Share This

News By

Related News

More News

Our Sponsors

Partners


Seasonal Picks

The Commuter Pig Keeper - 5m Books