High Canadian Dollar Lowers Returns for Western Canadian Hog Producers

CANADA - The Saskatchewan Pork Development Board says lower feed cost and lower costs for imported equipment are expected to partially offset reductions in the price of lives hogs in western Canada resulting from the high value of the Canadian dollar, writes Bruce Cochrane.
calendar icon 10 October 2007
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Over the past month the Canadian dollar has continued to gain on its U.S. counterpart and is currently hovering around par.

As a result of the high value of the dollar combined with high feed costs western Canadian hog producers are losing an estimated 20 to 30 dollars per pig right now.

However Sask Pork policy analyst Mark Ferguson says there is a couple of positive aspects to the higher Canadian dollar.

Mark Ferguson-Saskatchewan Pork Development Board

It helps the industry in a couple of ways, particularly with feed costs.

With a lower Canadian dollar wheat and barley prices which make up the majority of the feed ration costs would undoubtedly by higher.

Other products that are part of feed rations that are imported such as soy meal and corn, the high Canadian dollar makes them cheaper to purchase.

In the long term machinery and equipment imported for use in barns and slaughter plants will be cheaper to purchase which could improve the long term efficiency and cost of production of the industry.

In western Canada we believe that wheat and barley will be a competitive feedstock.

They have been in the past and, although it's not the case this year, we believe that western Canada will be competitive and may have a cost advantage in terms of feed in the long term so that's one thing to remember going forward.

Ferguson concedes the benefits of lower feed and imported equipment costs are not sufficient to fully compensate for the effect of the high Canadian dollar.

He estimates the push toward par over the past month has help reduced the price of live hogs in western Canada by six to seven dollars per pig and prices are about 40 dollars per head lower than when the Canadian dollar was in the 70 cent U.S. range.

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