Tough times in Canada

While I missed writing a blog last week, I did have the chance to visit with many readers of this commentary at the Leman Swine Health Conference and Minnesota Nutrition Conference. Both conferences had excellent speakers/topics. In spite of the short term angst in the industry because of grain price and availability concerns, there is optimism for many beginning next summer.

Lots of questions as to who is selling sows. The USDA Hogs and Pigs report later this week will give us a look at producer numbers and intentions as of September 1. While cull sow buyers have seen an increase in sales, some genetic suppliers are suggesting that the overall US inventory won’t be down as much as many expect.

Sow sales from Canadian producers are clearly up. I was in Ontario 10 days ago and many of the producers are concerned about their future. Similar to the modest sized US producers, most producers in Ontario also own farmland. They are concerned about the possibility of a severe erosion in overall financial equity. The drought impacted their grain supplies also so many will have to purchase feed grains in the coming year, further straining their finances.

With a strong Canadian dollar and their markets and risk management tools based on US dollars, their cost of production is higher than US producers. Because Canadian and US producers have very similar production systems and use the same genetics, our products are very similar in the export market. This means US producers have a price advantage at foreign ports. While the US industry exports close to 30% of our product, the Canadians export a much larger share. Tough times and tough decisions for these producers.

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