031129 Canadian Hog Industry Reeling Over Low Prices

Saskatoon - The downturn in the hog industry has forced one large hog barn to close its doors and is threatening others. Birsay Pork Farms has filed for bankruptcy protection, throwing at least 25 people out of work.

"It's ... just another sorry mark in agriculture. We just can't seem to find any bright spots anywhere," said Lorne Sheppard, of the initial investors in the plant.

Sheppard invested in Birsay Pork Farms in the late 1980s for two reasons: to provide a market for his grain and to help keep young people in the community by providing jobs. It's the same reason he invested in a potato plant near Lucky Lake. Now both have closed their doors.

Hog farms were supposed to be one of the agri-food industry's bright spots. The provincial government has encouraged expansion for more than a decade.

Big Sky Farms has been involved with much of that expansion. General manager Florian Possberg said they won't be closing any barns, but neither will they be building any new ones.

"We've decided that any new expansion is on hold until the market sorts itself out."

The hog industry has been hurting for some time now, he said. "It really started about 18 months ago. We've had an average price of a $1.22 a kilogram and for most operations, their break-even is probably somewhere between $1.40 and $1.45. So the length of our depression has really put a lot of pressure on our operations."

The BSE crisis in the cattle industry has aggravated the problem, he said. Packers have no market for certain parts of the carcass so they are paying even less for hogs.

Don Hrapchak - general manager of SPI, the province's largest hog marketing agency - said farmers are losing $25 to $30 per hog.

The problem is demand for pork has softened, he said. "Demand by the Japanese. Canadian demand for pork. U.S. demand for pork. With the problems with BSE, which did effect the demand for pork, all of those factors come to haunt the industry."

An additional negative factor is the stronger Canadian dollar, he said.

For all those reasons, the next year could be even worse for hog producers than this year, he said.

"We have a situation in 2004 where producers are going to be looking at some possible problems in the United States with country-of-origin labelling," he said.

"We have demand that still isn't at levels where it should be. And we have a situation where we have probably more hogs to market than what we have shackle space in western Canada."

Hrapchak said he doesn't expect production will fall below the two million hogs now produced. But neither does he expect any expansion in production in the near future.

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