Canadian Hog Liquidations Expected to Escalate

CANADA - The Manitoba Pork Marketing Co-op estimates Canadian pork production could potentially decline by as much as 30 to 40 percent as producers and processors adjust to the higher value of the Canadian dollar, writes Bruce Cochrane.
calendar icon 14 November 2007
clock icon 3 minute read

Due to reduced profitability resulting from the high Canadian dollar, high input costs and low live hog prices, Canadian hog producers have started cutting production.

At the same time American producers, buoyed by a weak U.S. currency have continued to expand.

Manitoba Pork Marketing Co-op CEO Perry Mohr expects the results to be increasing liquidations in Canada.

Perry Mohr-Manitoba Pork Marketing Co-op

Many producers that are at that point in their career where they don't think they're going to be around for another hog cycle and able to regain the losses that are currently being incurred, many of them are deciding to shut their operations down.

They're walking away from the industry with whatever equity they have and they're basically retiring their barns.

I've had many many cases of that over the last couple of weeks.

As a matter of fact the individuals that come through these doors, they're pretty much the only ones that are smiling, the ones that have decided to exit the industry.

I think the potential in the long term depending on how long this lasts and I do believe because the Americans are expanding right now that it could last longer than many of us hope or think and I do believe that there's potential for our industry here to be purged by anywhere 30 or 40 percent.

Mohr says liquidations have already started in Alberta and there is potential to see significant losses in eastern Canada.

He says producers in Manitoba are not immune, but with two strong processors, access to abundant feedgrains and access to markets in Canada and the U.S., Manitoba is geographically positioned to avoid the losses that may occur in other provinces.

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