CANADA - The General Manager of Manitoba Pork says outlooks for live hog prices, grain costs, exchange rates and weanling values will influence how quickly live hog production can be increased to meet western Canadian hog slaughtering capacity.
Under the "Pig Production Special Pilot Project Evaluation Protocol" 4 to 5 new swine barn projects are expected to be in the works by the end of the summer and the hope is to see another 5 or 6 in 2017.
Manitoba Pork General Manager Andrew Dickson says, before producers will be prepared to invest in new production, they will need to be confident they can make money.
Andrew Dickson-Manitoba Pork:
In western Canada we have an excess of processing capacity.
Another way of looking at it, we've got a shortage of finishing pigs that processing plants need to meet all the market demand for product that they're getting so we need to move more quickly forward and get some new finishing capacity put into place.
Producers, at the same time, have to make money at this.
They have to be able to repay any loans they borrow and there has to be a feeling that there's a positive future here before they make considerable investments in buildings.
So the processors are trying to negotiate contracts with farmers in terms of providing some incentives, there's a lot of work going on right now to try and reduce the investments costs.
The key one is what's the outlook for prices for grains over the next 5 to 10 years, what will the exchange rate be and what will be the price of weanlings over the next 5 to 10 years.
Then producers will have to put together balance sheets and income statements and so on to try and figure out whether all of this can work.
Dickson notes global demand for pork is increasing and new processing capacity coming on stream directly south which will require an additional 11 million new pigs so there is an atmosphere that the hog industry has a positive future.
ThePigSite News Desk