According to the Canadian Pork Council (CPC), the current feed shortage has been caused by a lack of carry-over stock from 2011, which it said supports the argument that it is necessary to reduce grain usage for ethanol production. CPC explained that the amounts of grains essential for feeding livestock rather than producing ethanol should be considered, as 60% of the cost of raising a pig is in feed.
Chair of CPC Jean Guy Vincent explained that grain is “by far” the largest component of raising pigs and the marketplace realities meant pork producers would not be able to pass added cost to buyers. Vincent said: “Margins become squeezed and producers need to either absorb heavy losses or, unfortunately, get out of the business.”
The cut in the estimate of US corn production by the United States Department of Agriculture (USDA) has added to the “anxiety” over the availability of affordable feed grain, CPC said. A USDA forecast of US corn production for 2012/2013 had been set at 650m bushels, which is the smallest ending stock since 1995/96; this, according to CPC, is partially responsible for the 50% increase in corn pricing.
An estimate that 40% of the US corn crop will be made into car fuel, compared to 36% for feed, has also left hog producers competing for a resource that is already in high demand. CPC said it was encouraging governments to review their ethanol policies in an effort to “temporarily relax the mandates and targets for biofuel production in response to the crisis”.
Vincent highlighted that the status quo was not going to sustain the hog industry and said pork producers needed to work with all members of the value chain to address short- and long-term issues. Vincent added: “The recent market conditions and feed prices were unimaginable two months ago and producers should not have to decide between losing their farm or increasing their debt to pay for unsustainable feed costs. We need the market to pay for the cost of providing consumers a healthy and safe food supply.”
Accurate and timely information is vital to surviving the latest circumstances, said CPC, as well as the entire industry pulling together and working as a team. In another attempt to alleviate the situation, a task group made up of producers and federal government officials has been set up. The group will review the situation and identify measures to assist the hog sector in managing the challenge, added CPC.
Over the next few months, CPC said it expects many “heavy losses” at a time when pork farmers expected to be in a “much-awaited period of favorable economic conditions”.
CPC has also said it will work with the federal government, but it is also encouraging producers to continue their diligence in managing their working margins, liquidity and the development of strategies to source affordable feed for the next year.