The Canadian hog industry is in trouble. Supply is exceeding demand; the farmers that have made it this long are struggling under debt; and the shift from small-scale to factory-style farms has contributed to the spread of disease and is taking a toll on the environment.
Problems are coming from every angle. The strong Canadian dollar is hurting international demand for Canadian hogs. New U.S. labelling laws have made it harder for American packers to import live Canadian hogs. And skyrocketing feed prices have cut profits, partly because federal and provincial mandates for ethanol are swallowing up the feed market.
In August, the federal government and the Canadian Pork Council introduced a Hog Farm Transition Program that will further restructure the industry and provide emergency loans for hog producers. But critics of factory farming say the transition program will only further entrench the intensive livestock operation model that is responsible for many of the industry’s problems.
Shift in scale
Hog farming in Saskatchewan went through two major changes in the 1990s that have set the stage for today’s crisis. The Crow Rate, a subsidy to farmers for freight fees, was removed in 1995. When shipping grain to the coast suddenly became more expensive, some farmers sought out markets closer to home – and the domestic hog feed sector took off.
Then in April 1998, single-desk selling, which allowed farmers to sell their hogs through a central auction run by Saskatchewan Pork International, was removed. When it was created in 1972, more than 12,000 mostly small-scale hog farmers in the province had access to the market; when it was removed, small producers had a much harder time securing decent prices for their hogs.
When small farmers couldn’t compete for big orders of consistent-looking and -tasting sows and hogs, they sold off their assets and got out. The number of farmers shrank as industrial hog operations replaced small-scale pig farming. By 2002, Saskatchewan’s hog industry was entirely dominated by four major producers.
“What we’ve seen is a real shift in scale,” said Cathy Holtslander of Beyond Factory Farming, a national organization that promotes “socially responsible livestock production in Canada.”
“The shift was desired by the packers, not the farmers,” she added.
Oversupply
As concentrated hog production increased and prices fell, smaller producers were driven out of the market by the industrial hog barns that began to crop up. Barns went from holding dozens of sows to hundreds, then thousands. Now the largest operation in Saskatchewan has over 20,000 sows.
“It’s simply a numbers thing,” said Harvey Wagner, producer of manager services at Sask Pork. “The way the whole structure of agriculture has gone in the last number of years, in all agricultural industries, the margins are relatively small. If somebody can only produce 200 hogs a year and they can only make $20 per hog, that’s only $4,000. Why would you be tied down for $4,000? You can go and get a part-time job and make more money than that,” he said.
These incentives to ramp-up production have only added to the list of problems for the hog industry. Hog production has outstripped demand, leading to an oversupply of hogs in Canada and the U.S. that has driven prices down.
“The world meat trade reacts a lot based on a very small change in supply,” said Wagner. “A small oversupply will drive prices down quite a bit and a small under-supply will drive prices up quite a bit.”
In April 2008, the Canadian government introduced a program that paid farmers $225 per boar or sow culled, reducing the supply by approximately eight per cent. The goal was to stop profit losses and adjust supply. But with complications such as high input costs, along with the bad press generated by H1N1 (aka “swine flu”), the industry has not recovered.
Swine flu
Industry spokespeople insist that “swine flu” is a misnomer that has left consumers with the mistaken impression that you can contract the H1N1 virus by eating pork.
“It’s very discouraging that [the media] continue to use that [term],” said Casey Smit, CEO of Big Sky Farms, the largest producer of hogs in the prairies.
While it’s true that consumers cannot contract the virus from eating the meat of an infected pig as long as it’s properly cooked, “swine flu” is not an entirely unfair label, according to Holtslander.
“I don’t think anyone called the swine flu, the swine flu because they had anything against hog producers. It was simply that that’s where it came from,” she said.
The H1N1 virus is a zoonotic virus, so it transfers from animal to human. It is a triple hybrid of swine, avian and human viruses that has been found circulating in swine herds in North America. The first triple-mutated virus was discovered in an intensive hog farm in North Carolina in 1998. North Carolina has the highest density of factory-style hog farms in the world. Studies estimate that the virus first made the leap to humans sometime between August 2008 and January 2009.
Because the industry serves a global market, the quality and health of animals has global consequences. “I don’t think the individual hog producer on a farm in Saskatchewan that’s trying to make a living is individually responsible,” said Holtslander.
“But the industry as a whole, because of how it is structured and the policies in Canada that pushed for increasing scale of production and eliminated the smaller producer is definitely implicated in the fact that we have an influenza pandemic going on today,” Holtslander continued.
Environmental impact
Concentrated hog barns also take a toll on the surrounding environment, especially water, air, soil and biodiversity. According to the Sierra Club of Canada, each hog excretes about 2,000 kg of waste per year, which is then liquefied and stored in open air lagoons.
This liquid waste is a toxic cocktail. A study by the George Morris Centre, an agricultural think tank, explains that “animal manure is also a source of salts and trace elements, antibiotics, pesticides, and hormones.” The higher the density of animals on a farm, the greater the operation’s impact on the surrounding environment.
Bailing out an industry in need, or exacerbating the problem?
The three-pronged Hog Farm Transition Program introduced in August will offer farmers the chance to bid on a share of $75 million to assist them to exit hog production for at least three years. The program is intended to permanently reduce Canada’s supply of hogs. But farmers will have to underbid each other in order to get cash to exit.
“It disadvantages the smaller, weaker players. The ones that have had the most trouble and the hardest time are going to have the least chance to get the funds they need to move on,” said Holtslander.
The assistance package will also allow farmers who can foresee profitability to apply for long-term loans under a Hog Industry Loan Loss Reverse Program.
For hog farmers who are able to stay in business, some additional relief may come through the third part of the assistance package: a $17-million International Pork Marketing Fund, which Canadian Pork International is planning to use to find new markets.
Even the Canadian Pork Council expects things to get worse before they get better, however. The lifeline package will help some farmers through to 2014. But the council predicts, “during this period there will be a significant amount of pain for farmers, their employees, their customers and suppliers.”
According to Smit, even the larger hog operations are having a hard time staying profitable.
“We’re up to 23, 24 months of losses here now and not all of them have been based on the normal, cyclical type of market,” said Smit. “The events of H1N1 really took the wind out of our sails and we’ve got a tough winter ahead of us to get through.”
Big Sky Farms Inc. announced Nov. 10 that it applied for creditor protection. The company will be reoganizing so it can access government loan programs, according to CBC News.
The Hog Farm Transition Program will result in fewer, larger farms. But according to Holtslander, that will put more pressure on the hogs and the surrounding water, air and soil quality.
“Hogs are in very close quarters in these factory farms and disease spreads very quickly because there are a lot of pigs excreting their waste and breathing the same air,” she said.
In Saskatchewan, the hog industry is the third most profitable agricultural sector, with significant spin-offs, providing jobs in transportation and feed sectors. The collapse of the industry will have far-reaching effects on the province’s economy.
But considering the health and environmental impacts of the industry, this crisis could be a chance to restructure the industry in new and responsible ways. Beyond Factory Farming notes, “Agriculture policies should promote health in Canada and around the world. Governments must stop making export and international ‘competitiveness’ their over-riding objectives, and stop subsidizing intensive hog operations.”