Editor’s note: Jessica Colby is a University of Regina journalism student. She previously worked at the University of Saskatchewan’s Western College of Veterinary Medicine (WCVM). This article is printed with permission from WCVM Today.
University of Saskatchewan scientists are working to discover how to prevent Streptococcus equi subsp. zooepidemicus from establishing itself in swine barns.
Several years ago, no-one in the Canadian pork industry would have been concerned about the potential risk of Streptococcus equi subsp. Zooepidemicus – bacteria that can cause infection in virtually every species, explained Matheus Costa, a swine medicine specialist at the University of Saskatchewan’s Western College of Veterinary Medicine (WCVM).
“Before 2019, if anyone investigating clinical cases found this bacteria in a pig, they would suggest this is just part of its normal biota,” said Costa. “We find it in healthy pigs all the time, so we never worried about it.”
However, that perception shifted in 2019 when S. zooepidemicus began posing a serious health threat to hog herds across Canada and around the world. During that same year, researchers were alerted to S. zooepidemicus outbreaks among pigs in New Zealand and the Netherlands.
“The problem is that it looks like it flares up over and over again,” said Costa. “It just doesn’t go away. Antibiotics will suppress it, but if we take antibiotics out, it comes back again.”
As with other illnesses, some pigs can also carry S. zooepidemicus without displaying clinical signs – a finding that was recently reported by Costa and his research team.
The WCVM research group is now aiming to discover how Canadian hog farmers can prevent this disease from establishing itself in their barns. Costa is also investigating the development of non-antibiotic therapies and prevention strategies to reduce the disease’s severity.
“Because it’s bacteria, antibiotics are usually the first thing we do. We can suppress disease by treating pigs aggressively,” said Costa.
However, veterinarians need to ensure that they are using the right antibiotic drugs to combat the infection, so they do not induce antimicrobial resistance. Costa said the main challenge is that researchers and veterinarians do not understand enough about the disease, “so we don’t know how to control it beyond antibiotics.”
Costa’s team is trying to determine what will slow the spread of S. zooepidemicus in barns, whether that includes workers washing their boots, testing every animal or depopulating a barn – a drastic option that is costly in terms of time and money.
“Depopulation means all the pigs go through the barn flow, then we empty the barn physically. Pigs are removed, and the entire barn is disinfected. Then we start repopulating,” said Costa. “We’ve done that before, and it doesn’t get rid of the bug, likely because of carrier pigs.”
As with any virus response, judicious use of antimicrobials is important. S. zooepidemicus presents clinical signs indistinguishable from African Swine Fever (ASF), making testing critical to being able to tell the difference.
Another problem with S. zooepidemicus is that its clinical signs are similar to the dangerous and extremely infectious African Swine Fever (ASF) virus that causes high mortality rates. Due to the similarities in presentation, it is impossible to distinguish between S. zooepidemicus and ASF without extensive testing.
“S. zooepidemicus looking like ASF adds another layer of complexity to this, because we’re not just dealing with a new disease,” said Costa. “We need to make sure we don’t have ASF as well, so we’re both trying to rule it out from clinical cases and making sure we understand this new disease.”
S. zooepidemicus usually affects older pigs, and its initial clinical signs include a lack of appetite and lethargy.
“There is an invasion of the whole body – it goes everywhere. Once it has access to the blood, it can essentially attack any organ, and that’s what we see: septicemia,” said Costa. “We see lesions in multiple organs, and that’s where it becomes challenging to differentiate it from ASF, because that’s what the ASF virus does.”
Unless the pigs have what Costa calls “nose-to-nose contact,” there is little chance the disease will be transmitted between the animals. A recent WCVM trial concluded that the bacteria spreads through physical contact.
“We’ve learned that if we have sentinel pigs in the room together with pigs that have S. zooepidemicus, the sentinel pigs never become infected if they don’t have nose-to-nose contact,” said Costa. “They could be close – at one-and-a-half metres apart – but they don’t get it. We’re going to facilitate dealing with the disease as we progress and learn more about it.”
Saskatchewan’s Agriculture Development Fund, Alberta’s Results Driven Agriculture Research (RDAR) and Canada’s Natural Sciences and Engineering Research Council (NSERC) provided funding for this study.
Warsaw’s modern skyline shows remnants of several periods of development and political control. Like Poland, Canada’s battle for culinary identity and foodservice survival in the COVID-19 crisis has caused some forced adaption to occur.
From kielbasa to perogies, borscht to pickles, many Canadians are familiar with the cursory aspects of Polish cuisine. In fact, a lot of it has become woven into the fabric of quintessentially Canadian cuisine, as a country primarily composed of immigrants and settlers. Many of those immigrants and settlers, over time, brought with them an enduring and endearing passion for pork that persists to this day – in Canada and still in Poland, especially.
Not only the aspects of hardy, cold-weather cooking, but other cultural components come into play, too, when looking at the culinary scenes in Canada and Poland. Beyond the food itself, both industries have also been saddled with challenges related to COVID-19. And, despite the odds, chefs in Canada and Poland alike continue to triumph when it comes to showcasing their countries’ finest dishes.
Polish cuisine’s meaty side
The golonka served at chef Adam Gessler’s Wódka Gessler Na Widelcu, in Warsaw, with a side of boiled potatoes and onion jam.Dry kabanosy manufactured by Mościbrody Meat Processing Plant
What makes Polish food Polish? A legacy of hardship, combined with curiosity, has shaped traditional Polish dishes, along with adopted ideas and ingredients from abroad.
Some of the more popular Polish meat-based specialties include:
Golonka: Pork hocks boiled and then roasted or braised in stock, beer or animal fats – like duck or goose. It is typically served whole – bone in, skin on – but some modern interpretations discard the bone and skin, leaving behind a leaner portion of meat. ‘Golonka’ means ‘knuckle,’ which is another name for the pig’s hock or shin, located beneath the leg and above the foot.
Zimne nogi: Chunks of pork and vegetables in an aspic, prepared similar to head cheese, using pigs’ feet. The feet are simmered with carrot, celery and onion until tender, including bay leaf and allspice berries for flavour, diced, then allowed to set in the strained stock from the same pot, relying on the natural gelatin found in the feet to hold everything together. Served cool, as the dish disintegrates when it becomes warm.
Kabanosy: Thin, smoked pork sausages seasoned with salt and pepper. Some require refrigeration, while drier varieties may be stored safely at room temperature. They closely resemble and taste like what most Canadians know as ‘pepperoni sticks.’ They are often served cold, as a snack or appetizer, but they can be sliced and mixed into soups and pastas, served warm.
Tatarski: Minced beef seasoned with simple herbs and spices, served raw, sometimes with egg or other garnishes. In Canada, the French word ‘tartare’ is more commonly used.
Carpaccio: Thinly sliced beef, served raw, often garnished with greens, slivers of cheese, capers and herbs. The name is borrowed directly from Italian. The product is not widely consumed in Canada, but it would be known by the same name.
Gęś pieczona: Roasted whole goose, a traditional main course for St. Martin’s Day on November 11. The dish is popular across central Europe, for the same reason. The date also coincides with Poland’s independence day, celebrating the end of occupation by German, Austro-Hungarian and Russian monarchies, as declared in 1918.
Pasztet: Known as ‘pâté’ in Canada, borrowed from French. This paste of minced meat, liver and seasonings is a popular sandwich topping, when sliced from a firm loaf. It also appears on its own, served as a soft mousse, in a manner similar to foie gras. Turkey – a bird native to North America – is often used, on account of widespread availability today in Poland.
These and many other forms of farmed and hunted red meat, poultry and seafood can be found in the broad repertoire of Polish protein consumption. For Poles, animal products really are cherished, given the country’s legacy of going without during different periods in its history.
Poland grapples with culinary identity
Chef Robert Sowa spent more than two hours eating and chatting with Canadian and American journalists attending the ‘Meat with European Quality’ study tour, in November 2021, explaining his menu and sharing entertaining stories.
Chef Robert Sowa owns several restaurants in Poland’s capital, Warsaw. He is a cookbook author, former international culinary competitor, former cook for Poland’s men’s national soccer team and current host of a cooking demonstration TV show. In addition to being a mentor for many up-and-coming Polish chefs, he believes in continuous improvement and evolving his menus, which consist of traditional Polish meals with an international touch, served in a unique way.
“I have gone to some famous restaurants abroad, and they give very small portions of food,” said Sowa. “If I am going to a restaurant, I do not want to leave hungry, no matter what.”
Poles are no strangers to large portions of food, which, at one point in time, were a lot harder to come by. When Poland emerged as an independent democracy following the fall of communism, society was turned upside-down in many ways. It is a legacy that some chefs, including Jurek Sobieniak – another kitchen extraordinaire turned TV host – speaks eloquently about.
Trends in other parts of the world – such as transitioning toward ‘flexitarian,’ vegetarian or vegan diets – are generally not looked upon with much enthusiasm in Poland.
Chef Jurek Sobieniak’s over-the-top persona took the form of Polish traditional dress on this particular TV broadcast. He was preparing parsnips, not to form them in the shape of a burger or sausage, but to enjoy as… parsnips.
“I don’t see plant-based alternatives being an issue in Poland,” said Sobieniak. “I like meat and vegetables, but if I am going to have vegetables, I just cook vegetables. No need to copy meat.”
But Poles do also pride themselves on produce, including stone fruits, durable vegetables and foraged fungi. It is a legacy of necessity and geography that exists to this day.
“Poland is an agricultural country, and people know that,” said Sobieniak. “But it has taken us a long time to adjust to the world we live in now, which is one of many choices.”
In Canada, where we have no shortage of choices, the struggle for culinary recognition still exists, and like the Polish food scene, we are sticking to our guns while remaining open-minded about who we are and how to represent ourselves by tapping into our gastronomic instincts.
Poland comes to Canada on the plate
Chef Paul Rogalski’s restaurant in Calgary, Rouge, was named one of the world’s 100 best in 2010.
Chef Paul Rogalski is co-owner of Rouge Restaurant in Calgary, where he was born and raised, but his surname belongs to the village of Rogal in Kalisz County, Poland, from where he has some ancestry. His establishment partners with local food growers and utilizes an on-site garden to create exceptional, handcrafted dishes for customers.
Rogalski’s grandparents were Polish and Ukrainian immigrants to Canada in the 1920s, and it was his grandmother’s cooking that left the greatest impression on his career.
“My grandmother cooked everything from scratch. They had a large farm and used to grow a lot of things themselves,” he said. “When I would visit there, she would harvest the garden and preserve everything for winter for family gatherings. I didn’t understand the influence she had on me until a few years into my career. I had an epiphany, ‘Holy cow! This all because of my grandmother!’”
Rogalski draws on his heritage and Calgary’s increasingly cosmopolitan flair to remain contemporary but also grounded in the classics. His current menu includes starters like wild mushrooms and toast, along with a solid lineup of proteins that would rival any flesh-loving Polish chef’s selection.
“For us at Rouge, it’s important that we use local products,” said Rogalski. “Market fluctuations and COVID-19 disruptions have made that more difficult. We like to purchase directly from farms, but we’ve found ourselves looking at ‘commodity’ product more often now.”
COVID-19’s impact is international
Chef Marcin Sasin has experienced significant impacts to the demands of his hotel kitchen in Warsaw, on account of COVID-19.
Catering for hundreds or thousands of guests in one sitting is no easy task, even when the food is simple, but for chef Marcin Sasin of the Sheraton Grand Warsaw, COVID-19 has made it just that much more difficult.
“Food price inflation and a lack of workers has hurt us,” said Sasin. “We are still catering large events in the hotel, but we are doing it with a much smaller crew, and we are starting to rely more on ‘ghost’ kitchen delivery orders to sustain us.”
Back in Calgary, Chef Rogalski claims not to have raised menu prices in about a decade, but the compositions he creates – especially when it comes to choosing cuts of meat – have become more variable and dependent on input pricing.
“If you can’t charge more, and your margins are slim, you need to lower your supply cost,” he explained.
However, many other Canadian restaurants have not been able to successfully navigate COVID-19’s on-again, off-again restrictions. To that end, industry group Restaurants Canada has been pushing for increased support.
“The fate of Canada’s more than 90,000 restaurants is still uncertain,” said Todd Barclay, President & CEO, Restaurants Canada. “Most have been losing money or barely breaking even since coming out of initial lockdown last year, and at least 10,000 establishments have already closed.”
COVID-19 aside, in Rogalski’s Alberta, other factors have left their mark on foodservice as well.
“The reality for anyone in restaurants in Alberta is this: oil and gas is number one, agriculture is number two and tourism is number three,” said Rogalski. “Numbers two and three need to fortify themselves and work together, since we depend on each other.”
Nowhere to go but up
Pork croquette and clarified borscht, one of seven courses on chef Sowa’s current menu at N31 Restaurant & Bar in Warsaw, where diners will not leave with an empty stomach.
Eating out is still seen, in both Canada and Poland, as a luxury that many would prefer not to do without. COVID-19 has complicated the situation, but there are plenty of talented, motivated and creative cooks chomping at the bit to fulfill this social need, as tastes and business models evolve.
Even as the nature of foodservice changes – favouring new options like online, app-based delivery ordering – there will always be a place for white linens, cellared wines and exquisite meats with a story to tell from farm-to-fork.
COVID-19 is a story unto itself, and in the coming years, the connections between livestock farmers, meat packers, chefs and consumers will continue to change, but what will stay the same is an appreciation for how food has the power to enhance our everyday lives beyond mere sustenance. No historical legacy, pandemic or supply chain roadblock can stop that.
Pork Commentary, January 31st, 2022 Jim Long, President-CEO, Genesus Inc.
Last week was the Iowa Pork Congress in Des Moines, Iowa. This Congress is the largest of the state winter events befitting the state with the most swine in the USA.
Our Observations
As usual, well-organized event, a reflection of the professionalism of the organizers.
We observed fewer attendees than in past years. Probably a reflection of Covid issues and maybe biosecurity concerns related to PRRS and PED. The weather was not a deterrent to travel.
The mood of attendees was optimistic with the hog market having jumped from low 60’s to 80’s since first of January and summer lean hog futures over $1.00.
The current high feed price levels were a major point of discussion. Seems like general attitude is they are expected to stay high for a while.
Not much, if any, discussion about new sow or finisher barns. A builder told us no need for finishers when so many were empty. Construction costs continue to increase building/equipment. For a 5,000 sow farrow to wean unit cost is $3,000 per sow; cost for finishers $400 per head for a 2,400 head barn with no land cost included. We were also told the current value of manure production in a 2,400 head finisher as fertilizer is $50,000 ($6-7 per head value).
Talking to some Packers, they believe the Omicron issue was mostly past through their labor force. Daily slaughter increasing last week as it did confirms this.
Packers we spoke to aren’t seeing any indication of hogs backed up. Iowa / S. Minnesota weights of January 22, 2022, of 291.5 lbs; compared to a year ago of 291.6 lbs., would reflect the same.
There was much discussion of the coming decrease of hogs. Lots of empty finishers, small pig prices of over $70 for an early wean, $100 for a 40 lb. feeder. Much discussion of PED and PRRS knocking down production. Fact is no one knows what hog numbers will be the next few months but certainly all indicating less than a year ago.
Producers told us Packers were calling them looking for hogs. My father used to say “Who’s calling whom.” is a reflection of supply-demand.
Several producers commented they’re, thanks to us, about our push on NPPC to fight for CFAP 1 top-up. We all hope the new leadership at NPPC will begin to fight with more earnestness for the 60,000 producers, they represent.
Some discussion on pork quality, as producers recognize the loss of Pork’s market share, the price of Beef three times Pork, Chicken Breast selling for more than Pork Loin. We understand the National Pork Board is starting some Pork Quality initiatives. We support all producers’ ways to bring more value to Pork. Better tasting Pork is certainly a good place to go.
Seems to be chatter that one of the larger genetic companies is blaming ear-biting, tail biting, slow growth on the Duroc breed. We would suggest they go to a mirror, it’s not the Duroc breed with the issue. Improving has to be more than just a slogan. At Genesus we have the largest registered Duroc herd in the world. We see none of the issues that are being blamed on Durocs.
Summary
Producers optimistic, prices next few months look strong. We see little sign of expansion. Our perspective, lean hog futures currently at range of $1.05 is lower than what hogs will sell for at market time. We expect to see $1.20 plus.
Editor’s note: David Laks is Vice President & Risk Control Services Manager for Hub International, a global agri-business insurance brokerage. For more information, contact Jenna Shields at JSC.Jenna.Shields@hubinternational.com.
Drought-related risks generated some of the greatest challenges in Canadian agri-business, in 2021.
If there is one word that can describe agri-business, including the hog sector, it would be ‘unpredictable.’
In 2021, farms and food manufacturers had to deal with a record number of weather-related challenges, ongoing labour shortages and an increase in cyber attacks.
In particular, labour shortages, often stemming from lower numbers of Temporary Foreign Workers (TFWs), have affected several points of the supply chain from the barn to meatpacking plants to transport logistics. In fact, more than five per cent of TFWs in Canada used to work in the hog sector. Of course, the labour shortage in agri-business – like in most industries – may actually be pushing the industry toward automation.
Hog farmers and pork processors will need to plan and prepare for 2022. Whether running a family farm or a major corporation, industry players and their partners will need to lean on their experiences to cope with risks.
Managing the impact of weather threats
It is impossible to predict the next catastrophic storm, but it may be a good idea to assess a farm’s vulnerability to extreme weather through catastrophe (CAT) modelling.
If 2020 was the year of the pandemic, 2021 was the year of catastrophic weather. Western Canadian provinces were especially hit hard, with heat waves, severe drought and wildfires taking over headlines last summer. And weather conditions brought challenges to farms and food manufacturers around the world, including frost damaging Brazil’s coffee crop and floods in China affecting livestock and meat processing.
Farmers and processors are taking steps toward risk management measures to ensure resilience, including securing adequate insurance coverage through government programs or private markets. Working with brokers to develop CAT modelling capabilities can help secure insurance, demonstrating to underwriters the strengths and vulnerabilities an organization has to extreme weather.
For processors, it is imperative to secure adequate supplies in the face of weather catastrophes, requiring stronger supply chains, alternate materials sourcing and proper insurance to guard against shortages.
Climate issues encourage water conservation
Widespread drought in 2021 made it clear that water is precious. In response, the Government of Alberta committed more than $900 million toward irrigation sector projects.
In 2021, the severe drought in western Canada highlighted the need for water conservation.
The record-setting drought, which has hit nearly every province across the country, is the worst nationwide in nearly 20 years. Farmers are beginning to recognize the long-term effects of climate change, adopting more sustainable practices to improve resilience. With less rain and warmer temperatures overall, crop yields decreased considerably.
As a result of the recent weather extremes, there will be a greater focus on water and energy conservation. Attention to costs and climate change will lead agri-business in general – and hog farmers, in particular – to minimize use of fossil fuels.
Taking precautions around allergens
For many food suppliers and manufacturers, allergens remain a major problem. Between 2015 and 2020, undeclared allergens represented more than one-third of all food recalls across Canada.
Proper risk management requires that special attention be paid to thorough, reliable and consistent cleaning of manufacturing equipment, as well as ensuring that food products are free of contaminants.
Depending on your organization, it may be a good idea to secure product recall insurance and product liability coverage. These policies protect food manufacturers from the high costs of product recalls and liabilities, both in terms of dollar amount and in terms of your reputation.
Approach automation with caution
JBS Foods was hit with a massive cyber attack this past year. Alberta Premier Jason Kenney toured the JBS plant in Brooks, Alberta, in December 2018.
JBS Foods – the largest meatpacking company in the world – paid more than $10 million in ransom after a cyber attack disrupted its North American and Australian operations.
This example of increased technology use leading to greater risks for the industry hit close to home for many farmers and processors, who were looking to increase automation to combat labour shortages, where possible. Generally, automation has been a godsend, particularly in manufacturing; it improves efficiency and quality control, with less reliance on human subjectivity.
Yet, the risks are not just financial. JBS had to halt cattle slaughtering at all its U.S. plants, as well as operations at its plant in Brooks, Alberta – about 200 kilometres southeast of Calgary – for a whole day. In addition, since JBS processes more than one-quarter of all beef in Canada, a longer shutdown would have led to disruptions in food supply chains and added to rising food prices. It could have impacted the organization’s reputation as well.
Keeping cyber security in mind means finding proper insurance coverage to protect your organization from cyber attacks. Because of the increase in cyber crime, cyber insurance in agri-business is expected to increase by 20 per cent or more in 2022.
The importance of prevention and deterrence cannot be overstated. Third-party audits, multi-factor authentication and employee training are essential. For cyber criminals, complacency is almost an invitation.
Getting yourself prepared
With so much that hog farmers and pork processors cannot control, it has never been more important to focus on the things you can control. Mitigating risk through CAT modelling, paying attention to weather events and water conservation, taking precautions with allergens and enhancing cyber security can help organizations find their balance in the coming year. Consult with your insurance broker to prepare for what lies ahead.
For the second year in a row, the Porc Show’s guests will not be treated to the beautiful sights and sounds of Quebec City, but the programming has remained as high-quality as ever.
The Porc Show’s virtual format returned for three consecutive weeks on Nov. 23, Nov. 30 and Dec. 7, 2021, welcoming nearly 1,000 guests tuned in from around the world. It was the eighth edition since the event’s inception and the second one held virtually, in light of COVID-19 concerns. The event was held in-person in Quebec City from 2014 to 2020.
“It’s a very dynamic sector, and in the last five years, we’ve seen great growth… But sometimes, if we take a closer look, we can see there’s been trouble as well,” said André Lamontagne, Minister, Quebec Agriculture, Fisheries and Food. “There are issues on the farm but also at the processing level. We can hope to see progress in the short term.”
While the event’s stunning location was greatly missed again this year, each day of the Porc Show featured multiple presentations on a variety of compelling topics, from pork market development, to managing on-farm costs, to promoting pig health and more.
Pork markets at the mercy of the pandemic, politics
The Tianzow breeding farm is a ‘hog hotel’ in China’s Sichuan province. A desire to recover from African Swine Fever (ASF) and reduce pork imports is driving rapid infrastructure expansion in the country.
Zhan Su, Professor & Chair, International Business, University of Laval believes that China will continue to be a thorn in the side of international pork traders. A reported rapid herd recovery from African Swine Fever (ASF) is looked upon dubiously by many pork-exporting countries, including Canada, but larger geopolitical considerations could continue factoring into the market’s ebb and flow.
While China would love to become more self-sufficient and curb its reliance on foreign pork, imports have surged in the last decade, now composing 10 per cent of the total volume of pork consumed domestically. Prior to 2008, China was a net exporter of pork. That year, the country imported less than 500,000 metric tonnes, and by 2020, it was importing more than 4.5 million metric tonnes. Even if ASF recovery happens as the Chinese government reports, pork from the Americas, Europe and Australia should remain desirable for years to come.
Rob Murphy, Executive Vice President, J.S. Ferraro – a Toronto-based meat and livestock market analysis firm – takes a less optimistic position on the Chinese market.
“Some time in the summer of 2021, the Chinese hog price dropped below the cost of production and has stayed there ever since,” said Murphy. “They will still be importing pork, but it won’t be nearly as strong as the height of the ASF problem in 2020.”
Murphy also thinks the U.S. hog herd could shrink in the first quarter of 2022, reducing hog availability and increasing hog prices for farmers, but numbers are expected to rebound in the second and third quarters, which could drive prices significantly lower.
“On average, for 2022, we end up with a cut-out in the mid- to lower-$80 value, which isn’t bad, historically, but it’s still quite a bit lower than the past year,” he added.
COVID-19 has a role to play on the processing side as well, as government-issued income supports for meatpacking plant workers may have collectively, artificially inflated incomes beyond the pre-COVID-19 growth trend, which has pulled some workers away from the sector altogether, adding to the existing problem of labour shortages, labour cost inflation and food price inflation for consumers farther down the value chain. However, these same income supports, taken together with foodservice restrictions, have driven pork demand at retail in the U.S., as more consumers are cooking at home, and as chicken and beef prices soar.
For Jan Peter van Ferneij, Senior Animal Protein Analyst, French Technical Institute of Pork (IFIP), global pork supply and demand may reduce in step with each other in the coming year. European Union (E.U.) exports to China dropped dramatically in 2021 compared to the past two years, but a projected decline of hog production in the U.S. could result in tighter inventories.
“For Canada, the consequences are the same. This year, China will not maintain the same demand as last year,” said Van Ferneij. “For now, we’re not seeing Russia much on the international scene, but things are developing in a sustained manner. Russia is suffering from ASF, and this is going to jeopardize their export ability, but if there is demand, Russia will develop exports. We will see this production uptick.”
In addition, Van Ferneij believes ASF’s expansion to new countries, social pressures, labour shortages and changing consumption patterns will play a role in the markets going forward.
Managing on-farm costs for better returns
Understanding cost of production is key to keeping margins positive for producers, according to Daniel Leblond (right). But a true understanding takes a commitment to properly gathering data over multiple years.
The skyrocketing relationship between cost of production and its direct link to feed costs has dominated the discussion for producers in the past year. Of all the proposed solutions, Daniel Leblond, General Manager, Groupe Porc LV Inc. – a 1,200-sow farrow-to-finish operation southeast of Quebec City – believes the most credible solutions are found within producers’ own operations.
“You need fixed points that allow you to look at the data and react accordingly,” said Leblond. “Risk management is a work tool within the business, and it will become more accessible for everybody. We used to need complicated math, but now we have tools that allow it to be done on a smaller scale. You need to understand your production costs. Accounting should look at a range of three to five years.”
Underscoring the importance of forward thinking, Leblond reminds producers to be patient and thoughtful toward the bigger picture, rather than seeking short-term gain.
“The day you know your production costs, you can see your weaknesses and strengths,” he added. “It’s not just risk management, but when you know those costs, the risk manages itself. Making a profit of $10 per pig for 10 months is better than making $20 per pig for just two months.”
The often-unseen or less considered aspects of production costs include everyday equipment maintenance. If an ounce of prevention is worth a pound of cure, farm loss prevention expert Jean-Claude Fecteau, President, In-Prev Inc. believes neglecting to fix minor issues within a barn can transpire into much larger problems down the road.
Electricity is the main cause of fires and losses in agriculture, which is why it is important to ensure work is being done properly, with attention paid to waterproofing and rodent-proofing especially. As an example, in winter, mice crave the heat generated by electrical panels and will make a home on the inside if there are gaps in the panel cover. This can go unnoticed if the panel is not being regularly checked. Generators, too, can be an ignored source of overheating and fire. Annual or bi-annual inspections by professionals are recommended, along with heat alarms for electrical panels.
Heating equipment itself can also become damaged over time and with the change in seasons. Proper suspension of equipment from barn walls and ceilings is necessary so that corrosion does not result in critical failures that send objects crashing onto the floor.
Promoting pig health and welfare
While the idea of ‘intuitive eating’ (what you want, when you want) is becoming popular in human society, allowing sows open access to varied diets can help them process feed more efficiently.
As feed represents the most significant consideration in cost of production, sow feeding may be worth a fresh look, according to Bruno Silva, Professor, Pig Nutrition and Environmental Adaptation, University of Minas Gerais (Brazil).
“Heat stress is the first limiting factor for feed intake. But, in reality, feed intake is just one of the factors related to metabolism,” said Silva. “If I let the sow decide how she wants to eat during gestation, how will she?”
Feeding sows a very starch-heavy diet, manually, only once a day can lead to what we as humans understand as the “McDonald’s effect” – the feeling of lingering hunger and increased agitation despite having eaten a large quantity of food. On the contrary, sows fed precisely calculated diets, using free-access systems, have lower cortisol levels (indicating less stress) than sows fed in certain conventional ways, such as using troughs positioned next to gestation crates. Lower stress equals better nutrient absorption. The use of group sow housing has an inherently beneficial impact here, and the inclusion of a fibre supplement can also slow the metabolism of glucose, which helps sows feel fuller longer.
“You will have some sows that fall within in an ideal range, some with metabolic disorders and some that are below potential,” said Silva. “Understanding each type will help formulate diets… The way you feed your sow during gestation will affect her feed intake during lactation.”
While sows today have a higher metabolism than in years gone by, reducing the overall need for feed intake, it is worth noting that sows do not stop growing themselves until after their fourth parity, and with each parity, a sow must still expend a large amount of energy, on account of lactation. By using best management practices in gestation, energy expense for the sow can be more efficient, which aids in her post-farrowing recovery and can lead to cost savings.
Even as some producers express reservations when it comes to converting to group sow housing, Yolande Seddon, Professor, Swine Behaviour and Welfare, University of Saskatchewan believes the transition has value, recognizing the large capital cost associated with making the change.
“When a producer is familiar with these systems, you can have similar performance between a free-farrowing system and a farrowing crate system,” said Seddon.
In Europe, where animal welfare is generally considered to be more progressive, support for greater welfare has become an increasingly important demand. In Germany, state-level welfare labelling for animal-based food products at retail is supported by more than 80 per cent of consumers. In Spain, the existing labelling system includes a tiered ranking that considers everything from minimum E.U. standards up to additional improvements related to space, pain management and enrichment.
As in Europe, analgesics are required in Canada for pain management in tail docking and castration at any age, but this is not the case in the U.S. For that reason, Seddon believes Canada is better positioned in this regard, as it relates to satisfying modern demands. In most parts of Asia, animal welfare standards are considerably lower or non-existent, but in Brazil, standards are being brought up to match some of the more progressive systems in the world, as a way to secure market access.
“Globally, there is an obligation to provide appropriate care for animals,” said Seddon. “The expectation is that good animal care means good food safety. Animal welfare is part of product quality and, therefore, forms part of this trust.”
Looking forward to the ‘new normal’?
The Porc Show’s ‘Cook It’ box featured all ingredients to prepare pork shaobing – a shallow-fried stuffed bun – at home, in addition to a video tutorial demonstrating the process.
Last year, as COVID-19 fatigue had already set in for many, there was faint hope in-person gatherings could be held again at the same time this year. For some events across the country, this has been the case, but for many others yet, the situation has not improved enough to generate the necessary confidence to make the commitment.
Nevertheless, the Porc Show’s organizers have done an impeccable job delivering this major bilingual conference virtually, even incorporating some ‘normal’ aspects in addition to presentations, such as a digital networking space and recognition for Quebec food.
The Porc Show’s ‘Cook It’ box, available by mail for participants in Quebec and Ontario, featured a delicious-looking pork shaobing recipe for entertaining a party of four. The box was created by chef Anita Feng, proprietor of a new Chinese eatery in Montreal, J’ai Feng. The box is cleverly designed to bring a taste of hands-on fine dining into the homes of those who chose to order it.
The ‘Cook It’ box, along with a culinary student competition, brought a much-desired personal element into the event beyond the conference basics. These efforts do not go unnoticed, especially when guests are left wanting the human connection that is sadly lost with virtual events.
From pork market development, to managing on-farm costs, to promoting pig health and the extra perks afforded by the program, the Porc Show is a reminder for the entire Canadian pork sector to continue the conversations, inspiration and dedication that shape the resiliency of everyone who strives to make the industry great, even during troubled times.
Pork Commentary, January 24th, 2022 Jim Long, President-CEO, Genesus Inc.
It appears U.S. lean hog futures are finally moving closer to the reality that will be the spring-summer prices of 2022. For several weeks we have been speaking to the fact that from mid-April to mid-August 2021 lean hog prices were $1.00 lean plus lb. We could not comprehend why 2022 with definitely less hogs than 2021 would not match or exceed the 2021 cash price points.
Lean Hog Futures
November 1
January 22
May
87
99
June
92.325
104.77
July
92.825
104.70
August
91.725
103.52
We expect cash lean hogs will surpass their lean hog futures with cash prices reaching points over $1.20 this summer.
It appears Packers in USA and Canada are struggling to get hogs slaughtered due to current Covid (Omicron) on top of an already shorted workforce. Last week’s projected U.S. hog slaughter was 2,440,000 compared to last year’s same week 2,718,000 (down over 10%). Some of the decline is a smaller inventory but it is not all of the difference. The good news is so far weights seem to indicate hogs not backing up.
Iowa – S. Minnesota Average Weight
Jan 15, 2022
291.4 lbs.
Week ago, 1/8 2022
292.2 lbs.
Year ago, 1/16 2021
291.8 lbs.
Weights declined from week before and are lower than a year ago. We expect when Omicron runs its course and workforce gets more available we will see a surge in cash hogs as Packers start chasing the limited number of hogs.
Everyone gets a turn to ride the wheelbarrow. Over the next few months, it will be the producers’ turn.
Iowa Pork Congress
This coming week we will be at the Iowa Pork Congress the premier U.S. winter swine event. We will be at Genesus Booth. All are invited to the annual Genesus Reception on Wednesday. I hope to see you there. Next week we will report our observations from the Congress.
China
Wens is one of China’s World Mega producers which at the end of 2020 had 1.1 million sows. Wens recently released a performance forecast for 2021.
Hog Sales – 13.2174 million
Average Sales Price – 17.34 yuan/kg ($1.26 U.S. lb.)
2021 Financial loss – 13 billion yuan ($2.05 billion)
If we got it correct, Wens is projecting a $2.05 billion-dollar loss on 13.2174 million hogs marketed while selling at an average of $1.26 U.S. lb. Our Farmer Arithmetic – the number of hogs divided into financial loss is $155 U.S. per head. If Wens had 13.2174 million hogs divided by 1.1 million sows = 12 hogs sold per sow per year.
We Pig is a database in China with 156,203 sows on 195 participating farms.
We Pig Annual Report
U.S. PigChamp Quarter 3
Average
Top 10%
Mean
Top 10%
Total Born
12.3
15.51
15.23
16.52
Born Alive
11.25
13.96
13.41
14.7
Weaned per Litter
9.81
11.59
11.65
12.95
Litter per Sow Per Year
1.93
2.39
–
–
Pigs Sow Year
18.57
26.57
24.51
30.74
We expect wean to finish mortality in China is 15-20%. If so, the average producer circling around 15 hogs per sow per year marketed.
China National Bureau of Statistics reports 670 million hogs sold nationwide in 2021. Our Farmer Arithmetic – if we use $100 per head per hog. 670 million x $100 = $67 billion U.S. loss for industry.
Over the coming weeks, the hog companies that are publicly owned will release their financials for 2021. We will see the losses they report.
Our premise – when producers lose money you get less hogs. When you lose lots of money (i.e. $100 per head) you get a lot less hogs. We expect China’s sow herd has declined and is still declining as loses are still in the $100 per head range. Imagine what would be happening here if we had lost $100 per head for months upon months. Armageddon.
As the legendary trader from Memphis Charlie McVean often said “Wait until the dog hits the end of the chain.”
We expect that ongoing decline of the sow herd of USA, Europe, and China, with over 75% of the world’s swine, will lead to an explosion of prices when the dog hits the end of the chain.
Pork Commentary, January 17th, 2022 Jim Long, President-CEO, Genesus Inc.
Last week the U.S. slaughtered 2,407,000 hogs; a year ago the same week 2,644,000, a decrease of 237,000 (about 89% of same week 2021 number). From all reports we hear the US – Canada plants are struggling to get people to work due to Covid issues. This is restricting slaughter. The same issue will be in hog barns with people not showing up for work. The fewer employees in the supply chain from Covid come on top of an already shorted labor force. Productivity suffers in all parts of our industry. “Hopefully” the “experts” predicting that the Omnicron variant will sweep through fast is true and things can return to our “new normal”.
We believe, if not for the Covid slaughter plant induced slowdowns, we would be discovering the total lack of hogs in inventory.
Iowa/S. Minnesota hog weights 292.2 lbs. this year; 293.1 lbs. last year same week. Hogs, despite Covid’s slowed slaughter rates, still below year ago. That tells us hogs not backing up except in specific farms.
Talked to a person attending the South Dakota Pork Congress last week. Asked him what was number one takeaway issue. Answer “Every feeder pig broker in North America is here looking for pigs to move, there isn’t enough to fill demand.” Large volume finishing empty barn space is chasing lower pig numbers, the result of 300,000 fewer sows, disease, record-high sow mortality, high feed costs, loss of productivity from shortage of labor etc.
Last week in this commentary we asked for readers to report to us what new sow barns are being built now. We have asked this question multiple times over the years. We always got a significant list of new barns. This year? Zero. Our thoughts. Either no one reads the commentary or there is zero or next to zero new sow barns being built. Our thought if you’re not adding you’re subtracting.
Iowa/S. Minnesota Market Hog Price 2021
January 1, 2021Lean Hog Futures
Actual Cash Market 2021
Diff.
April
72.42
April 16
105.84
+33
May
76.75
May 14
116.99
+40
June
82.75
June 15
131.08
+49
July
82.95
July 15
115.51
+32
August
82.45
August 16
102.67
+20
So much for lean hog futures being a good predictor of where hog market is going. Looks like last year’s January Lean Hog Futures underestimated what the real lean hog market would be by over $60 per head. This year there are less hogs than 2021. Hard to believe April to August lean hogs won’t match or be higher this year.
Choice Beef cut-outs closed 284.31 lb. Friday; Pork cut-outs closed at 89.07 lb. Pork is about 30% the price of Beef. Obviously, consumers pay more for Beef. They much prefer the taste and pay accordingly. Would it not make sense to produce Pork that tastes better? Getting more money for our Pork is a path to better margins. Sometimes as an industry we chase pennies and miss the dollars that can unlock the path of better profitability. Pork with better marbling tastes better. The European Swine Genetics devoid of marbling will never deliver a product to meet consumers real demand. We are fooling ourselves to believe different. We need to think more as food marketers not hog producers.
U.S. Chicken price is really strong. $1.34 lb. vs. 82¢ lb. a year ago. A huge amount of money increase on slaughters running over 160 million a week. Certainly, helps cover higher feed costs. It appears so far U.S. Chicken industry not expanding with actual weekly slaughters most weeks lower than a year ago. Production restraint looks like a recipe to push prices higher. We expect the fewer hogs in USA will trigger similar price increase as soon as Covid labor issues end.
This weekend the Canadian government enacted a law that all truckers entering Canada must be vaccinated for Covid. This affects both Canadian and US truckers. It is estimated that up to 15% of Canadian truckers and 40% of US truckers are not vaccinated. This will affect supply chain including hog and pork flow. Just one more issue impacting our industry. We wouldn’t be surprised to see Canadian retail stores not able to keep shelves full and just in time manufacturing and retail facilities disrupted. Empty store shelves are something our society is not used to seeing. We expect that could trigger some real backlash.
Final Thoughts
Some Futures closed over $1.00 lb. on Friday. In 2021 mid-April to mid-August cash lean hogs every week was over $1.00 lb. We have fewer hogs in 2022 than in 2021. Less hogs will lead to prices greater than 2021.
Chicken and Beef prices will be supportive for hogs due to their own high prices. It’s not good news with hogs currently being marketed under the cost of production.
Our premise good prices will be here soon and be sustainable due to the continued lack of supply.
Pork Commentary, January 10th, 2022 Jim Long, President-CEO, Genesus Inc.
This past week, U.S. lean summer futures exceeded $1.00 a lb. They then fell Friday supposedly because of a “scare” that hogs won’t get slaughtered due to lack of labor.
Latest weekly Iowa/S Minnesota average weights this year 291.4 lbs., a year ago same week 291.6 lbs. Appears to us hogs are current compared to a year ago. IE not that backed up. Key over the next three weeks is watch weights, that will reflect supply and ability of packers to get them killed.
The December 1 USDA Hogs and Pigs Report indicated 4% fewer market hogs than the year before; 68.021 million vs. 71.136 million a difference of 3.115 million hogs. If you assume 26 weeks birth to market that is 120,000 fewer hogs to market weekly year over year.
From what we can gather on the strong demand for small pigs. There seem to be lots of barn spaces chasing fewer pigs. Farmer Arithmetic 120,000 fewer pigs a week is 120,000 spaces a week without pigs. No wonder small pig prices are strong. Last week’s USDA report – Cash Early Weans at $64.59 and 40 lb. feeder pigs at $82.43.
Fact Iowa/S Minnesota lean hog price was over $1.00 a lb. lean starting April 7, 2021 – August 24, 2021. Hard for us to believe 4% fewer hogs (-120,000 a week) won’t match or exceed that price high in 2022.
Production is being eroded by: record-high sow mortality (dead sows don’t have pigs), record-high wean to finish mortality. PRRS 144 has hit again cutting production, PED has been devastating in some areas, labor issues are eroding production. Not enough people in sow barns to do a proper job, industry short of knowledgeable pig people leads to less pigs produced.
We know of few new sow barns under construction. We would ask anyone who knows of new sow barns under construction (contemplated construction please report as such). We will report our findings. All respondents will be protected by cone of silence and anonymity.
U.S. Carcass Cut-out Values Last Friday
Carcass cut-out value
85.90¢ lb.
Primal Rib
$157.15 lb.
Primal Belly
$139.74 lb.
Primal Butt
$112.00 lb.
Primal Loin
82.10¢ lb.
Primal Ham
53.31¢ lb.
It’s interesting the highest valued cuts Rib, Belly and Butt are the cuts with the most marbling. We believe consumers vote with their money and it’s obvious they want pork cuts with marbling which gives a better taste. Taste is what matters. It’s sad to see where Loin and Ham prices are. They used to be at the top of cut-out value until the insane quest of our industry to produce lean pigs that made Loins and Hams devoid of taste and flavor. Farmer Arithmetic, if Loins and Hams were $1.00 on cut-outs now, a price still below current Ribs, Belly and Butt prices, the total pork cut-out value would be above $1.10 lb. compared to 85.90¢ lb. That’s an increase of over $40 per carcass. That’s real money.
We need to think as marketers. The facts show what consumers prefer to buy. We need to improve the quality of our Loins and Hams to meet our customers’ needs. Some think any brown boar called a Duroc is a solution. Unfortunately, some of the mongrels called Durocs with European genetics have no better taste or flavor than any of the other synthetic products they sell. At the end of the day it’s the taste of the pork that creates real demand not the breed of a boar. If we want to drive pork demand and revenue the path is to better-tasting pork.
Quote
“Denying the truth doesn’t change the facts.”
NPPC has new leadership. They represent 60,000 producers. Last week the Biden administration announced a billion-dollar program for the meat-pork industry. We haven’t seen any comment from NPPC. NPPC position on this initiative? Did they lobby for this funding?
Final Thoughts
U.S. – Canada hog price is below cost of production. There is no sow expansion and maybe contraction. USDA indicates less hogs in 2022 than 2021.
Europe hog price is below cost of production – losing about $30 U.S. per head. Cull sow price has been at record low for the last 15 weeks. A reflection of large volume of cull sows. Europe is liquidating at a current rate we believe of 25-50,000 sows a week.
China’s producers are losing money. Our estimate about $50-75 U.S. per head. Sow liquidation continues with ongoing large disease challenges. China, we expect is culling about 200-300,000 sows a week.
These three areas produce over 75% of the world’s hogs. At some point when liquidation stops (it hasn’t yet) the global price will explode.
Pork Commentary, January 3rd, 2022 Jim Long, President-CEO, Genesus Inc.
We are at a New Year. Like most in our industry, we are optimistic. Our industry has by its very nature evolved into a collection of optimistic participants. We are all the survivors of the huge consolidation of the last three decades. Thousands of producers have left our swine business throughout the world primarily because they didn’t have the capital and or courage to go on. Optimism is part of the courage. We can all list the issues that can make things go wrong in the pig business: disease, markets, costs, labor, environment, etc. The list is daunting, but we all still go on because we are optimistic and, in some sense, we have no choice but to forge ahead defying the list of obstacles to success.
A few years ago, we heard a large producer say re our industry “The women and children are dead, all that is left are the warriors.” Sums up where we are. For many of us, our Journey has had its challenges but we continue on with the spirit of optimism. We look to 2022 with optimism, because we are optimists.
Future
The last few months in North America, Europe, and China producers have been losing money. It’s the first time that the three largest producing areas in the world have all been losing money at the same time. Collectively our calculation has the three areas losing $2.5 – 3 billion U.S. a week. History tells us when producers lose money you have less pigs in the future. We believe history will repeat itself. This time the collective decrease in hog production due to financial losses will be unprecedented.
Charlie McVean, the legendary trader from Memphis used to say “wait until the dog hits the end of the chain.” That’s where we are today, liquidation has happened in USA with no expansion in sight; Europe and China have been for months liquidating at high levels. Sometime in 2022 when their liquidation levels push hog numbers down, the dog will hit the end of the chain. Then we expect hog prices in many parts of the world will match or exceed their highest price ever. Last year in the U.S. there were many weeks over $1.20 lean lb. Why would we not expect that price to be surpassed? There are less lean hogs in U.S. this year by summer there will be less hogs in the rest of the world. The U.S. future market today in the mid 90’s is significantly undervalued.
2022 – Here We Come
In our opinion before 2022 is over we will all consider the year as one of the best years ever. Less Hogs lead to higher prices. We will achieve profit levels unprecedented. Observation – our strengths are our weaknesses. We are maybe optimistic to a fault. But as Elon Musk says; “I’d rather be optimistic and wrong, than pessimistic and right.”
Editor’s note: Bijon Brown is the Production Economist for Alberta Pork. He can be contacted at bijon.brown@albertapork.com.
Whether African Swine Fever (ASF) breaks in the U.S. or Canada, the situation would be a disaster. With the discovery of ASF in the Caribbean, U.S. officials are paying close attention to their overseas territories, like Puerto Rico.
The impact of African Swine Fever (ASF) on markets in Asia and Europe continues to be a tale of woe for the global pig and pork industries. With ASF’s arrival on the doorstep of the Americas – in Haiti and the Dominican Republic – we are reminded just how close it is to the continental U.S. and Canada.
The discovery of ASF in either the U.S. or Canada would mean significant losses of pigs, pork and, ultimately, profits for the entire industry, including farmers and meat packers. To mitigate these possible economic impacts, we must take a closer look at how our national industries are linked and what some of our options are.
Canadian pig and pork markets are highly dependent on the U.S., as dictated by hog pricing data collected by the U.S. Department of Agriculture (USDA), which informs hog prices paid to producers by export-certified ‘federal’ packers overseen by the Canadian Food Inspection Agency (CFIA). As of September 2021, Canada had exported nearly 300,000 metric tonnes of pork to the U.S., in addition to nearly four million weaners and more than one million finishers, breeding stock and cull hogs. These cross-border movements have generated more than $500 million in revenue.
In contrast, just over 150,000 tonnes of U.S. pork made its way to Canada during that same time, and Canada is not a major importer of live hogs. The sheer size of the U.S. market dwarfs the Canadian market, which is why it is even more important for the Canadian industry than the U.S. industry to evaluate its position in response to ASF. This poses an interesting dynamic if ASF enters either of our countries, significantly impacting Canadian producers and packers either way.
What to expect if ASF enters the U.S. first
U.S. hog prices would tumble in the event ASF enters the country, which would also have a dramatic impact on prices paid to Canadian producers. Canadian packers, however, may stand to gain.
The U.S. consumes about three-quarters of the pork it produces, and the remaining one-quarter is exported. In the event ASF enters the U.S., the country would still be awash with pork.
The U.S. hog price is quite responsive to the pork export price. Specifically, a one per cent fall in the price of pork exports is expected to lead to a 2.4 per cent decline in the price of hogs. This, however, is an incremental relationship characterizing the impact of small changes in the export price.
For an abrupt loss of the export market, alternative approaches would be required. Almost overnight, U.S. pork prices could fall by one-quarter, without even considering the price effect of excess supply sitting on the domestic market – unable to be moved outside the country. Hog prices are even more volatile than pork prices, so the shock to the hog price would be even more significant. Nevertheless, this price drop is not expected to be permanent, as producers would adjust to the new pricing signals they face and ease production. In time, domestic demand will take care of some of the excess supply, and markets will stabilize, albeit at a lower price.
Since Canadian packers rely on U.S. prices, it is expected that Canadian hog prices would fall sharply even though ASF had not entered Canada. Such a price drop in the immediate term would be a great benefit to Canadian packers, as they would be able to purchase market hogs at ASF-weakened prices and sell the pork at a premium on the world market. Producers, on the other hand, would be left to bear the immediate burden. However, if such conditions lasted for any length of time, many independent producers would be forced to quickly exit the industry, which would seriously dwindle available hog supply for packers. As such, the medium- to long-term outlook would be bleak for everyone.
What to expect if ASF enters Canada first
With 70 per cent of Canadian pigs and pork bound for global markets, a widespread export ban would close international borders immediately.
If ASF enters Canada before the U.S., our industry picture will be even darker for producers and packers, as our export-dependent supply – representing about 70 per cent of all pig and pork production in the country – would be left without an end destination. With domestic Canadian pork consumption of around 800,000 tonnes per year, it would take more than two years to get through one year’s worth of production. Consumers would need to more than double their consumption of pork to overcome this surplus – completely unreasonable.
Managing the crisis from a pricing standpoint – which is only one part of the much larger puzzle – would require significant adjustments at all levels of the value chain, but especially at the producer level. Supply regulation would be required swiftly, as well as a robust price support program to help the industry navigate the prospect of near-total decimation.
The relationship between U.S. and Canadian hog prices is a one-way street. ASF in Canada would not impact U.S. prices, and the market signal would actually prompt U.S. producers to increase production to fill the gap left by the absence of international Canadian pork exports. Inversely, Canadian producers would need to make substantial cuts to production, in response.
Canada, being an isolated market, would therefore require a domestic price to reflect the new situation. Currently, there are no mechanisms available to collect domestic pricing information provincially or federally. Without a handle on domestic prices, government support would need to kick in, if producers and packers have any hope of recouping losses. Even so, compensation rates would need to be tied to current market prices, but if there is no way to collect this information, governments would have no basis on which to assess the scale of losses. Urgent attention, therefore, ought to be placed on creating transparent pricing information.
The direct hog price impact is just one angle of the larger financial impact. The shock to the system will increase the anxiety levels of lenders who may want to call outstanding balances to be repaid and cut off existing credit lines. Financing is the lifeblood of many farming operations, and if these supports disappear, it would create substantial difficulties for many businesses.
Sooner than later, price transparency discussions need to take place. Governments already have experience dealing with this kind of mass crisis, given the COVID-19 income support response, but will they be open to talking ASF? It is worth considering that COVID-19 has affected millions of Canadians, while ASF’s impact, however terrifying for our industry, would be much smaller in its reach. It is incumbent upon pork industry stakeholders to act now, rather than wait for solutions to fall into place.
Producer-packer risk-sharing may be optimal
By working together, Canadian producers and packers can find solutions to the ASF pricing problem, but not without price transparency.
Recognizing that few good pricing options exist for the Canadian industry in the event of an ASF outbreak, even in the U.S., our national industries could continue to operate under the existing framework, or employ a risk-sharing model backed by government support for transparent pricing information, or implement a price floor for hogs to prevent a rapid decline that would cripple farmers financially.
If everything stays the same, prices will continue to be based on what happens in U.S. markets. The only support to producers would be voluntary hog price insurance or business risk management programs like AgriStability. Current hog price insurance premiums are considered prohibitively high, and uptake of hog price insurance has suffered, as a result.
Even if AgriStability were to be triggered, provincial and federal governments may have the option of introducing a price floor, which would soften the blow of losses. Price floors are not new; in fact, they were used in the U.S. during the Great Depression. A price floor in the case of ASF would not require government funding but rather legislation that dictates hog prices cannot fall below a minimum threshold for producers. Importantly, Canadian packers would not suffer from this kind of support to producers, as U.S. packers would be absent on the global market, providing considerable leverage for Canadian exports, which would spell higher pork prices.
But what would be the ideal price floor to protect producers while also ensuring packers can continue to profit? Establishing an effective price floor requires transparent, Canadian-based hog pricing data. By sharing revenue more equitably across the value chain, governments can have confidence that our industry is doing everything it can to defend itself, rather than looking for handouts.
As an alternative to price floor legislation, the industry could, perhaps, come together and solve the problem without government intervention. If producers and packers could agree to share the revenue and risk from pork sales, many of the potential hurdles to insulating the industry against losses in the event of ASF would disappear naturally. Such an arrangement would correct the hog pricing signal mismatch between the linked U.S. and Canadian markets, and it would facilitate more equitable distribution of profits while satisfying government.
Zoning is the unsung but somewhat unreliable hero of ASF preparedness. Many efforts are being made to negotiate zoning agreements with Canada’s major pork-trading partners – including successful ones with the U.S., European Union (E.U.), Vietnam and Singapore – but notable liabilities still remain with important countries like China and Japan, especially. China’s track record in this regard is predictably poor for any country that finds itself impacted by ASF, but Canada’s long and trusted relationship with Japanese buyers is one that our industry is keen to preserve.
In the case ASF enters the U.S. first, Canada would been seen as an easy outlet for surplus U.S. pork. It could be expected that a flood of U.S. pork would arrive in the Canadian domestic market. Given the pricing linkage, this would actually help alleviate the dip in U.S. pork prices, positively impacting U.S. hog prices and consequently helping Canadian producers a bit.
In the case ASF enters Canada first, producers in non-infected zones would still be able to ship pigs to packers, and that pork could continue moving into the U.S. Likewise, the movement of weaners and culled hogs, primarily, would be allowed. However, it would be unsurprising to see a significant price discount for Canadian shipments, which would still result in major losses across the value chain. Despite that reality, zoning arrangements may help the cause of ASF recovery, but this assumption relies on these agreements being honoured in the time of actual crisis, which is never guaranteed.
The time to act is now
Through the introduction of price floors, zoning agreements and other work being done to prevent and prepare for ASF, profit- and risk-sharing options are on the table for the Canadian pork industry if hog price transparency is established.
It is worth noting that the expectation of government support should not be the default position of the industry in the event ASF arrives. A more workable approach is to seek solutions internally – among industry stakeholders – to ensure that ASF’s devastation does not spell our complete demise. Urgent action is needed.
