What about new facilities in the Prairie Provinces of Canada?

This week I’m off to Saskatoon, Saskatchewan to speak at Saskatchewan Pork’s Annual meeting. While their overall industry size is smaller than the major US producing states, they do see pork production as a viable contributor to their rural economy.

Unlike the current situation in the US where slaughter capacity is being tested prior to the new slaughter plants coming on line in the next 2 years, Manitoba and Saskatchewan face a shortage of market pigs. They have an excess of slaughter capacity (unlike their neighbors to the east in Quebec and Ontario).

For several years no new production facilities were permitted in Manitoba due to the provincial government concerns regarding phosphorus pollution of Lake Winnipeg. This moratorium was recently lifted for western regions of Manitoba and the Manitoba Pork Council has been working hard on possibilities of new grow-finish facilities. This effort includes acting as an interface with provincial regulators for anyone considering applying for a permit for new facilities.

The challenge though is construction costs in the prairie provinces. The current estimated cost for a new grow-finish facility in western Manitoba or eastern Saskatchewan is around $500CA per space. With today’s exchange rate, this converts to approximately $390US. Contrast this with the current $300-325 all costs (fully slatted facility, road, utilities, permitting, etc) that US producers paid this year in the upper midwest and you get a sense of the struggle.

Add to this the strong demand for Canadian born weaned pigs and the very favorable exchange rate (CA paid in US dollars) and it becomes a tougher decision when considering the investment in grow-finish facilities.

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