Pork Producers Face Cost Crisis

With two of Canada’s major pork producers filing for bankruptcy protection, is B.C.’s small hog industry about to be slaughtered?

“Don’t mess with people’s bacon,” warns Geraldine Auston, general manager of the B.C. Pork Producers Association and the B.C. Hog Marketing Commission. In a world where there’s a demand for Baconnaise (just as it sounds: a bacon-flavoured mayonnaise product), Auston’s advice sounds solid. But the approximately 25 pork producers who make up her producer association’s members may have trouble complying.

Pork producers across the country – B.C. included – are facing a crisis: last year’s drought in the U.S. pushed grain prices well above usual market rates, to the point where the current cost to feed a pig is higher than the value of that same pig at market.

“Right now they’re losing $30 to $35 a hog,” says Jack DeWit, a former hog farmer and current chair of the B.C. Pork Producers Association. With the going rate for a 250-pound pig standing at $130, a 23-per cent loss on each pig is no small amount, especially when you consider the volume. “That’s on every pig that comes out of their barn. So if they ship 500 pigs a week, that’s $15,000 to $20,000 every week,” DeWit says.

A bacon shortage isn’t likely to transpire (fear of one got plenty of media play last fall), but an increase in pork prices is almost certain. Unlike milk and eggs, which fluctuate in price based on the cost of production and are supply-managed and subject to border tariffs, pork has no such protections in place. Nor has it seen a substantial price increase in more than a decade, Auston points out.

While B.C.’s hog producers are facing tough times, James Vercammen, professor of food and resource economics at UBC, is not so sure that alarm bells need to ring – just yet. Vercammen points to the local industry’s low employment potential and the water contamination that hog manure can cause as reasons he is reluctant to label the pending industry problems as a crisis.

“There is nothing wrong with us importing pork and exporting more blueberries. B.C. has very high land costs and, as such, it is unreasonable to expect that B.C. agriculture can remain competitive in all of the major sectors,” he says.

Vercammen also points out that hog production is not a leader of B.C.’s agricultural industry, falling 13th behind more popular products like chickens, dairy, apples and blueberries. B.C. is certainly not a large player in the Canadian market either, producing only one per cent of the country’s pigs, but as the once-robust pork production industry of the prairies has demonstrated, last year’s feed shortage is affecting producers both big and small. Saskatchewan’s Big Sky Farms – Canada’s second-biggest hog producer – and Puratone Corp. – Manitoba’s third-largest hog producer – both filed for bankruptcy protection last fall. Auston predicts we’ll see similar filings here in B.C.

“Next year we are going to have fewer farms. Do we know how many? No, not yet. For us even losing one farm is significant because we have so few left.”