Hog inventories: Third quarter 2006

Farmers reported 14.1 million hogs on their farms as of October 1, 2006, according to a survey taken in early September. This was down 2.4% from the second quarter of 2006, and 5.3% below the same date last year.

Hogs inventories in Eastern Canada, as of October 1, 2006, were down a substantial 8.0% from the same time last year. Those in Western Canada fell 1.8%. Diseases, such as porcine circovirus and others, continued to plague hog production in Quebec and Ontario. Since the second quarter 2005, the rate of losses to disease has been double that of prior years.

Although hog prices have improved modestly in recent months, they remained soft earlier in the year, in part because of a stronger dollar. During the first six months of 2006, the average price for hogs was 19.4% lower than the same period in 2005. With weak prices, hog farm cash receipts during the first half of 2006 plunged to $1.7 billion, down 19.3% from the same period last year.

In 2006, international exports of Canadian hogs reached near-record levels. Over the years, an increasing number of younger hogs have been exported to the United States for feeding, as farmers take advantage of abundant corn supplies south of the border.

Hog slaughter in Canada slipped 2.6% in the first nine months of 2006 from the same period in 2005. This is consistent with lower prices paid to producers since 2004. Domestic slaughter rose steadily during 1999 to 2004, reaching a record high of 22.9 million head in 2004. Since then, levels have been declining.

Livestock statistics – concepts and methods

Concepts
Inventory levels of the various types of livestock intended for sale in Canada are measured at specific times throughout the year. Surveyed operations are requested to include all animals located on the farming operation, regardless of ownership. They are also asked to include animals owned but pastured on a community pasture, grazing co-op or public land. Producers are asked to exclude animals owned but kept on a farm, ranch or feedlot operated by someone else. Inventory levels are estimated for cattle, calves, pigs, sheep and lambs. Estimates are also produced for certain categories of animals on the basis of age, sex, weight and/or purpose i.e. breeding or slaughter.

Current information on livestock inventories and related statistics such as supply and disposition enable those active in the agricultural sector to observe and assess changes in the industry, measure performance and keep the agricultural community and general public informed of developments. The primary data users are federal and provincial governments, producer boards, farmers and farm organizations, private business, academic research institutions and students. Livestock data assists governments in formulating agricultural policies and developing programs. Farming organizations use statistics in developing recommendations for producers and governments. Farmers make increasing use of prices, production, and marketing statistics in planning their operations. In addition, these livestock statistics are used in the calculation of farm incomes and in the Canadian System of National Accounts for indicators such as gross domestic product.

Methods
To produce livestock estimates, there are actually 6 different survey occasions. All of the survey occasions collect data primarily using Computer Assisted Telephone Interviews (CATI) although there are special procedures in place for the very large or complex operations. Two of the occasions are the January Livestock Survey and the July Livestock Survey. These are large-scale general livestock surveys collecting data on cattle, hogs, sheep and other livestock, referring to inventories at the 1st of the month. The probability samples include about 10,000 operations at January 1, and about 18,000 operations at July 1. These surveys collect data during a three-week period in the western provinces, Ontario and Quebec. Regardless of when operators respond, they are asked to report inventories as of January 1 or July 1. The livestock survey results are released, following processing and analysis, approximately seven weeks after the reference date.

Hog inventories are the focus of two other survey occasions collecting estimates of pig numbers at April 1 and October 1. This survey was initiated in 1998 as estimates from 1978 to 1997 were based solely on analytical tools. For the hog surveys, a sub-sample of the prior livestock survey is used. The probability samples are 2,500 at April 1 and October 1 and, similar to the livestock surveys, these CATI surveys cover the western provinces, Ontario and Quebec. Producers are requested to report their inventories as of the reference date, although the data are collected during a 7-day period near or before that date. The hog survey results are normally released three to four weeks after the reference date.

The June and November Atlantic Surveys are used to produce estimates for that region. These surveys are multi-purpose collecting data, primarily inventories, on livestock including cattle, hogs and sheep in addition to collecting data related to the area, yield and production of the principal field crops. The probability samples are 1,300 in June and 2,200 in November with the data collected by telephone. The results are released at the same time as the livestock results. For reference points where surveys do not exist for the Atlantic region, analytical tools are used to produce the estimates.

Recently a new piece of information has been added to the cattle statistics allowing users a better understanding of the cattle industry. In essence, the total inventories are distributed, on the basis of survey results and sector level balance sheets, to a specific farm type. The two major categories are dairy and beef. The beef sector is then broken down to beef cattle on cow/calf and mixed beef and dairy operations; beef cattle on feeder, stocker/finish operations; and, beef cattle on feeding operations, which include feedlots.

To summarize, the livestock statistics are survey-based estimates. The survey relies on a list frame that is established every five years by the Census of Agriculture and updated to include new entrants, particularly large hog operations. The probability sample surveys are conducted by telephone. The survey results are analysed and corrected before the data are used to analyse the industry and fine-tune the estimates.

The survey data are reviewed in a board environment before the commodity analyst works with the data primarily using supplydisposition analysis. The results of the industry analysis are reviewed by the board before being sent to the individual provinces. Once the data are finalised they are released to the public and published. The principal data released include inventories and summarized supply-disposition tables. The data also flow, via farm income estimates, to the Canadian System of National Accounts. In addition the data are used in the calculation of net farm income projections, produced by Agriculture and Agri-Food Canada in co-operation with Statistics Canada and the provinces.

Further Information

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October 2006