Genesus Global Market Report Canada, May 2019

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Genesus Global Market Report
Canada, May 2019 

Bob Fraser – Sales & Service, Genesus Ontario

bfraser@genesus.com

 

Canada – Capital & Courage

 

Bob Hunsberger, Wallenstein Feeds, Hog Economics Summary Sheet shows from eight weeks ago, a tremendous and unprecedented reversal of fortunes with profitability going from per pig with average production loss of (-$34.07) to profit of $55.39 per pig with average production. An unbelievable $89.46 per pig increase in record time! Then with the next twelve-month projection moving from $20.98 to $70.10.

In my last commentary I suggested “Perhaps the cavalry is showing up just in the nick of time!” That now appears to be the understatement of the year (decade). I also suggested that if there wasn’t significant capital flow into this industry its continual decline appeared all but inevitable. So now what? The capital is now flowing (gushing) in and although we’ve experienced some volatility in the futures market the cash has continued its steady march upward beyond, I expect every producers’ best dreams of little over two months ago. Therefore, the capital is going to be there. Certainly, for the next twelve months with reasonable expectations for a good period beyond that. In the past this would lead to expansion, even massive expansion. Is it different this time? Suggesting long established cycles and trends “are different this time” usually proves a fool’s errand. However, some things to consider.

Another very key component to this business along with capital is courage. As Jim Long has observed pork producers are fearless. “The platoon you want to be in to go to war.” Although fearless doesn’t equate to crazy. The list of things that might go wrong in the industry always seems to be longer than the things that may go right and getting longer.

Even laying aside the possibility of an ASF “black swan” landing on our shores this industry appears to have become considerably more volatile. Who in the past would have thought the arrest of some Chinese woman in Vancouver, some random tweet of a US President had anything to do with you and your pork business livelihood? As we’ve come to learn perhaps a considerable amount. This coupled with ever increasing regulation, red tape, labour challenges, mounting environmental and welfare pressures certainly makes entry or expansion into this industry not for the faint of heart.

Here in Ontario at least one provider of ballast against all this has been land. The Ontario pork producer’s original integrated model of land to pigs to manure to corn and back around has proved a very stabilizing and sustainable one. The tremendous appreciation of this land as outlined in the tables below has proven to be considerable ballast against the storms of the last decade and beyond. Certainly, for those on the inside looking out. Those that have accumulated a land base over a reasonable period of time. However, for new entrants that ballast may look more like a boat anchor to entry. Twenty thousand dollar per acre plus land added to the cost of a new hog operation brings a whole new set of challenges. Likely to require some new and innovative models at least if we’re interested in seeing anyone new to the game. Already seeing some of this as some established producers are getting creative on how to bring new entrants into the industry and perhaps solve some of their management and labour challenges.

This industry always remains interesting but hopefully the recent turn of events is going to make it even more so in a positive way.

See below a summary of  the FCC FARMLAND VALUES REPORT,  published on April 29th 2019,  that covers the period from January 1 to December 31, 2018

National trend

The average value of Canadian farmland increased 6.6 per cent in 2018, following gains of 8.4 per cent in 2017 and 7.9 per cent in 2016.

In all provinces except Nova Scotia, average farmland values increased. Quebec experienced the highest average increase at 8.3 per cent, followed by Saskatchewan and Alberta, both at 7.4 per cent, and British Columbia at 6.7 per cent. The rest of the provinces were below the national average with Prince Edward Island’s average increase at 4.2 per cent, Manitoba at 3.7 per cent, Ontario at 3.6 per cent and New Brunswick at 1.8 per cent. Nova Scotia recorded a decrease in average farmland values of 4.9 per cent.

Note that in Newfoundland and Labrador there were not enough publicly reported transactions to fully assess farmland values. When looking at the national results, it’s important to remember the reported number is an average. The differences between regions within each province vary widely.

Source: https://www.fcc-fac.ca/home.html

TQLS and Genesus signing the
breeding strategic cooperation agreement

Swine breeding in China is integrating with the world’s standard.

On May 9th and 10th , Genesus team, including the president and CEO Mr Jim Long, Vice president Mr Mike Van Schepdael, General Manager of China Area Mr Gu Yaping, and the representative of CSEA in China Mr Hu Song visited TQLS group for the meeting regarding the project of “High Quality Swine Breeding Strategic Cooperation”.

The chairman Mr Lei Wenyong, CEO Mr Feng Guangde and the General manager of swine division hosted this visit with utmost cordiality on behalf of TQLS group.

Chinese animal husbandry industry is undergoing the transformation and upgrading period with overall relatively weak farming and breeding level, which is in urgent need of the change. The meeting between two parties is focusing on the discussion about the establishment of the new model for the development and exploration of domestic farming companies, in the meantime this meeting brought up new direction and thoughts for the development of swine industry in the future, hoping to completely improve the production efficiency level of Chinese swine farming.

Discussion

On the afternoon of May 9th, TQLS group organized the exchange symposium in their operation center in Mianyang, the chairman Mr Lei Wenyong expressed their warm welcome towards the Genesus visiting group led by the president of Genesus Jim Long coming a long way from Canada. Both parties had initial approach about the intent of this strategic cooperation and the cooperation model during this symposium as well as open discussions covering the topics like development models in the farming industry, development prospect and other talking points, etc.

Tour 

On the morning of May 10th, Genesus group led by president Jim Long had a tour around Maple Leaf Pasture Breeding Center, Changyuan Breeding Stock Sales Center, Creek High Quality Food Park and Sundaily Modern Ecological Farm. Through the on-site tour and communication, Genesus group led by the president Jim Long had better understanding about TQLS company development process, industrial layout and their comprehensive strength and gave a very high appraisal to TQLS modern farming system and rapid development.

Signing Ceremony 

After the tour, both parties went to TQLS Mianyang operation center for further communication about the detailed plan for the high quality swine breeding strategic cooperation. During the communication process, TQLS and Genesus broke inherent thinking and continuously negotiate and investigate the new cooperation model that breaks through traditional pattern. According to deep discussion, all-round strategic cooperation based on genetic breeding program coordinated with production management, precise nutrition, bio-security and marketing and promotion has finally been agreed.

The chairman Mr Lei Wenyong pointed out in the signing ceremony that he is full of confidence and looking forward to the strategic cooperation between two parties and he believes that both parties will definitely open up an all-round deep cooperation. He emphasized, this strategic cooperation will put a strong and colorful stroke in the history of Chinese even global swine industry and will further promote the coordination and development for both parties and make sure a win-win cooperation!

Jim Long and Mike Van Schepdael expressed in the signing ceremony that this strategic cooperation will play an inestimable role in future development for both parties and they also highly expected a long term deep cooperation with TQLS will be developed. Jim Long gave a high praise that Maple Leaf Pasture Breeding Center and the breeding stock center are the most beautiful farms he has ever seen, with such good scale and facility TQLS must be able to provide the delicious, nutritious products with best quality and reasonable price to Chinese consumers and the cooperation between two parties will beyond expectation.

Mr Ron Lane – the sales director of Big Dutchman China witnessed this strategic signing ceremony. Ron Lane spoke that TQLS is a young, modern and technology motivated company, Big Dutchman is very optimistic about this strategic cooperation between TQLS and Genesus. He believed that the deep cooperation between two parties will definitely bring new vitality and motivation to the development of Chinese swine industry.

The CEO of TQLS Mr Feng Guangde on behalf TQLS and the vice president of Genesus Mr Mike Van Schepdael on behalf of Genesus signed the strategic cooperation agreement perfectly. The signing of this agreement is a sign of TQLS and Genesus further deepening their strategic cooperative partnership, and both parties has taken an important step towards the all-round cooperation in order for complementary advantages, powerful combination and win-win mutual benefit.

Along with the speeding up of Chinese swine industrialization development process, people have attached more importance to the concept of international synchronous breeding. Meanwhile, consumption upgrading and the demand for high quality food is constantly increasing, which laid a solid foundation for the cooperation between TQLS and Genesus. We believe in the near future, TQLS will make greater contribution to Chinese swine industry in the way of upgrading the breeding technology, promotion of agriculture industrialization development and the transformation and upgrading of Chinese swine industry.

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