The pig squeeze
Bacon lovers around the world should brace for a rise in prices and even potential shortages as the global hog industry struggles to cope with soaring costs.
Pig farmers in Canada and elsewhere have seen feed costs roughly double this year because of dry weather in the United States and Russia that has driven up the price of corn, wheat and other feed crops. That has forced many farmers to cut the size of their herds or get out of farming altogether.
"A lot of farmers have just shut down and moved on to something else," said Karl Kynoch, a hog farmer in Baldur, Man., who is also chair of the Manitoba Pork Council. "There are barns that are emptying out."
Mr. Kynoch said the number of hog farmers in the province has fallen from 1,700 in 2006 to less than 500 today. "And we keep falling. We are not sure where we are going to stop."
Mr. Kynoch said it costs up to $170 to raise a hog, roughly two-thirds of which is feed. But hogs are selling for only $130 per head, mainly because so many farmers are selling off their herds.
It's not just in Canada. Farmers in the United States and across Europe are cutting the size of their herds as well and Britain's National Pig Association is warning consumers about bacon shortages and a possible threefold increase in prices for pork products.
"Pork has always been the affordable meat. It's half the price of beef and lamb," association chairman Richard Longthorp, said in a press release. "We urgently need the retail price to go up by a modest amount to keep pig farmers in business, but we want it to remain the most affordable red meat."
Canadian consumers won't face shortages, farm groups say, but retail prices are almost certain to rise. Gary Stordy, a spokesman for the Canadian Pork Council, said it is hard to predict exactly what impact the rise in feed costs will have on retail prices and it won't happen for several months. But all of the pressures on the system "will have an effect on prices."
Mr. Stordy noted that the number of hog farmers in Canada has been dropping steadily since 1996, but took a sharp downward turn in the past six years. In 1996, 21,105 Canadian farmers had pigs on their farm. That number fell to 12,320 in 2006 and to 6,820 in 2012. Canada's total herd has fallen from around 32 million hogs a few years ago to 27 million today. Most of Canada's hog production is exported, although that has been hampered by the stronger Canadian dollar and trade restrictions in the United States.
The industry was just starting to recover last spring, Mr. Stordy said, when feed costs spiked because of dry weather in the U.S. and Eastern Europe which sent corn prices up. Canadian hog farmers use a blend of feed that includes corn, wheat and barley. They also add a supplement made of soybeans or canola. All of those commodities have increased in price this summer.
For the moment there is a glut of hogs and pork on the market, as Canadian and American farmers rush to sell their herds to cut their losses. That has pushed down the price of hogs and pork. But most analysts expect prices to begin rising by next spring once the current glut is gone. Mr. Stordy said some futures prices indicate the price of hogs could climb to $170 by November and even higher by next spring. That would be good news to farmers who can hang on until then. But that gain would be wiped out if there is another bad growing season.
Mr. Kynoch said he has seen too many friends and neighbours go out of business. He believes even a modest increase in retail prices would make a difference to farmers. "It doesn't take much," he said.