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This past week we attended the Ontario Pork Congress and participated at the Genesus exhibit. Our observations:
- The Ontario Pork Congress is held in Stratford and has been going for many years. Like most other exhibitors’ attendance is declining with fewer producers in a consolidating industry.
- Ontario is somewhat unique in the continued large presence of independent producers with insignificant corporate ownership. The independents are mostly land based owning land, growing most of their own feed and farrow to finish. Land values are high with cropland selling in good farming areas for $30,000 (USD per acre) creating strong equity bases.
- The Ontario sow herd is not expanding in our opinion or contracting. 2024 breeding herd 317,000, 2020 it was 323,000.
- Ontario producers have more pigs than can be marketed. The two major plants Sofina and Conestoga each handle about 45,000 hogs per week. About 20,000 head go to USA per week.
- The wildcard is hogs from the province of Quebec with Olymel the major packer in Quebec lost several 100 millions of dollars in the last few years. Olymel has since cut slaughter capacity. This has led to about 20,000 hogs a week being sent to Ontario or USA. Quebec hogs going to Ontario for slaughter push Ontario hogs to USA. It’s domino effect.
- Quebec pig production has been sustained by a government led program called ASRA. It is insurance program that leads to financial top ups based on cost of production, producers share in the cost. Over the years over a billion dollars has gone to Quebec producers. If not for ASRA, we expect there would be as many pigs in Quebec in as there is in New York and New England states (next to nothing). A recent study (last 2 weeks) by the Quebec Ministry of Agriculture indicates the cost of production in Quebec is 19% higher than Ontario’s or about $45 per head.
- There is now a program in Quebec for producers to get paid to quit production. It’s voluntary and goal is to cut 1 million pigs from production (50,000 sows). There has been some activity. At the Ontario Pork Congress we talked to Quebec people who thought supply will be declining while others thought not so much. Trucking of Quebec hogs to some plants now $60 per head, cost of production $45 per head higher. Hard to see how this can continue working in an industry that is already challenged for profitability.
- Rob Flack was recently appointed Minister of Agriculture for Ontario. Rob for 25 years was President of Master Feeds a Canadian wide feed company now owned by Alltech. We have known Rob for a couple decades, our industry is lucky to have someone of his ag knowledge, ability and drive. Rob was at the Pork Congress to speak to producers. Before he spoke Rob asked us what did the Pork industry need. Tongue in cheek we replied an ASRA program for Ontario to put us on same playing field as Quebec. We suggested we could get the money from Alberta as they have lots of money and it’s been used in Quebec for many years to support ASRA. Rob didn’t think he would go there. He is also wise.
- In Ontario one of the major plants Conestoga (45,000 head a week). It’s owned entirely by about 150 pork producers. Conestoga had its 30th anniversary a week ago. My father Gerry Long was the founding Chairman, he and several other leading producers 30 years ago had a vision that the producers needed to become integrated. 150 independent producers joined and though it was rough going at first, they have persevered and built a successful business that has produced returns for farmer owned better than the market. My father was a leader, and I am proud to be his son.
- At the Pork Congress we spoke to several feeder pig brokers. Usually, this time of year little pigs are plentiful and are begging to find finisher space. Last year isoweans were about $10 each delivered. These pigs would go to market in December not exactly considered ideal marketing month. What’s interesting not like almost every year, there is demand for little pigs, brokers scrambling to find pigs to fill orders. Large orders are $40 each while breakeven is around $25. The mantra “no one pays more than they have too”. Is the feeder pig story the front end of the lesser pigs? Canary in the coal mine?
Summary
The industry prospects if based on lean hog futures does not look good for next year. The June 1 Hogs and Pigs Report will be released this week. Year to date (end of May) sow slaughter has been 92,000 more than a year ago. We expect sow herd will be down liquidation continues, PRRS is hitting hard again. Less pigs, will support prices but we will continue to live in a fool’s paradise if prices spike and we don’t address short and long term demand issues. Pork cut-outs $1.00 lb. Beef cut-outs $3.20 lb. We need better taste.
