Relative Profitability of Hog Production in Western Canada and the US Midwest

by 5m Editor
31 October 2001, at 12:00am

By Larry Martin, Kevin Grier, Al Mussell, and Kate Stiefelmeyer, George Morris Centre, Guelph, Canada - Studies of international competitiveness in hog production completed by the George Morris Centre in 1994 and 1999 found that Western Canada had the lowest overall cost of the regions evaluated. This article looks at an updated model to determine if this remains the case.

To determine whether this remains the case, the model used in the previous studies was updated with monthly data from 1999-May 2001 representing the Western Canadian Prairies (Eastern Alberta), the Eastern Canadian Prairies (Southwestern Manitoba), and Southern Minnesota. The model was used to evaluate competitiveness in hog production on the basis of variable production costs, gross margins, and net profit for a 1200 sow farrow to finish operation and for a 1200 sow farrowing unit.

Based on changes that have occurred in Western Canada and in US farm policy, the conclusions of this study differ from its predecessors. The significant competitiveness criteria are the relative variable costs, gross margins, and net profit. The results showed that, among the 3 regions:
  • Southern Minnesota had the lowest feed costs given the assumed rations
  • outhern Minnesota had the lowest variable costs for farrow to finish, farrowing, and finishing
  • Southern Minnesota had the highest hog prices, although Eastern Prairie hog prices are converging toward Southern Minnesota prices
  • The Western Prairies had the lowest fixed costs
  • Southern Minnesota had the highest net profit in the farrow-to-finish enterprise
  • The Eastern Prairies had the largest net profit in farrowing
  • Finishing weanlings from the Eastern Prairies in Southern Minnesota is more profitable than farrow-to-finish in Southern Minnesota, or farrow-to-finish in the Eastern Prairies

To read the full executive summary of this 7 page pdf report CLICK HERE

Source: George Morris Centre, Guelph, Canada - October 2001