A decline approaching a quarter of the sow herd. Granted productivity gains have lessened the overall production drain but still not exactly an encouraging picture.
There is a variety of reasons for this some known perhaps some unknown, but the result is a weakened infrastructure, much in need of replacement. The bulk of the new “good” barns are from the hay day at the turn of the millennium when the industry grew to its peak. Those barns are now drawing onto twenty years old, with the bulk of everything else south of that. Most could use some serious refurbishing where some should probably just go away. Lack of finishing space at least in Ontario seems chronic as I am asked constantly if I know of any space. I think many producers would agree that there is much space presently in use that might be better retired.
However, replacement of capital assets, takes just that capital (and as Jim Long would add courage). Something that has been lacking in this industry of late. For the last while margins have charitably been thin and spotty. Olymel, both Canada’s largest pork processor and pork producer reports in 2018 fiscal year both it’s eastern and western hog production divisions suffered losses bigger than the previous fiscal year. Whereas their eastern fresh pork sector saw positive results second only to 2017 that was their best year ever. The western fresh pork sector had excellent results for the third consecutive year. This would be consistent with most of the other Canadian packers and US packers for that matter in enjoying unheard of margins for three or four years now.
Although unless fully integrated a capitalist pork system struggles to figure out how to perhaps better share the margins and this isn’t without consequence. Kevin Grier in his Canadian Pork Market Report suggests the Maple Leaf Foods plant in Brandon Manitoba 4th quarter 2018 kill to be 70-72,000 weekly against an 80,000 plus capacity. Olymel in Red Deer Alberta running less than 35,000 weekly against 45,000 (single shift) capacity. This doesn’t really work, a pork plant like a finishing barn’s per head costs soar when operating under capacity. So, the question becomes who is going to blink first. The apparent easy solution to the need for more hogs certainly in producers’ eyes is just pay more. However, to date this seems to have only shuffled the deck chairs from one plant to the other, with no more hogs. Without a solution it would seem a plant is vulnerable to closure.