The Rural Voice, 2004-06, Page 22Laverne Brubacher
BEHLEN BINS
BEHLEN STEEL STRUCTURES
BERG SUKUP BROCK GSI
PATZ JADVENT
RAD SPI
ALL SIZE BIN
FLOORS
John Baak
Construction Ltd.
R.R. 1 Hanover, ON N4N 3B8
E-mail: JohnBaakConstruction@sympatico.ca
Phone: 369-5478 Fax: 369-9906
HURON
�ICONSTRUCTIO`
j/ • AGRICULTURAL
• RESIDENTIAL • COMMERCIAL
Complete buildings
- roofing - repairs - renovations
519-327-8361
519-292-0078
Fax 327-8445
SERVICE CENTRE INC.
- 479 MacEwan Street, Goderich • N7A 4M 1
YOUR LOCAL SUPPLIER ISO 9002 REGISTERED
We carry a wide variety of
steel including hot rolled flats.
angles, tubing. sheet, plate,
beams, rebar, mesh matts,
expanded metal, stainless,
aluminum, cold rolled flats,
angles. If we don't have it
here, we'll find it for you as we
have other branches to source
material. Our services are
sandblasting, priming, cut to
size, shearing, and free
delivery.
Visit our website at
www.canadasteel.ca
Please Call:
TOLL FREE: 1-888-871-7330
PHONE: (519) 524-8484
FAX: (519) 524-2749
18 THE RURAL VOICE
higher than the same time last year,"
O'Neil stated. "Canadian hog prices
are $20/ckg to $30/ckg above the
same time last year, despite the fact
that the stronger Canadian dollar
continues to limit gains."
O'Neil says export markets
have been given much of the
credit as foreign customers
turn to North American pork in the
wake of concerns over the safety of
beef and poultry. "But signs of strong
pork demand were already apparent
last fall, before the most recent round.
of disease news that has restricted
North American beef and poultry
exports. During the week before
Christmas well over 2.2 million hogs
were processed in the U.S. and prices
held steady. So even though hog
supplies are well above the same
time last year, they have decreased
from their highest levels. As supplies
continue a seasonal decline, prices
will continue to receive support."
But adding to the confusion,
according to Statistics Canada, the
total Canadian hog inventory as of
April 1 was 12.938 .million head, a
0.4 per cent decline since January 1.
The agency says the sharpest decline
in hog inventory occurred in Ontario,
where the total number of hogs 20 kg
and over fell 4.7 per cent. Much of
the inventory reduction is a result of
lower hog prices in recent years.
Despite the decreasing hog inventory.
breeding stock in Canada was
slightly higher.
On top of the uncertainty of the
the U.S. trade action, higher prices
for corn and soybeans have been a
detriment to producers who don't
produce their own feed. While the
higher feed costs may be managed at
today's robust prices, one observer
suggested feeding $1.40/kg pigs on
$4 corn would spell trouble. A drop
in pork prices could see more people
getting out of the business, he
suggested.
But producers who have their own
feed have been isolated from the
problem, says Huron County farrow -
to -finish producer Dave Linton. "The
high (feed) prices haven't affected
me at all," he said, making use of his
own corn and soybeans he had
banked with a local elevator.
This certainty of costs for farrow -
to -finish producers is one reason
Grand Valley Fortifiers' Ross
predicted the survivors in times of
low prices like last year will be
farrow -to -finish operators.
"The survivors will be the low-
cost producers and the low-cost
producers will be the farrow -to -finish
operations, owner -operated with a
land base to grow all or a portion of
his/her own feed inputs," he
predected. "That's where we believe
the industry is heading. Only time
will tell if our predictions come true."
In explaining his decision to get
out of the loop business, Ross stated
"In Ontario, w e have calculated and
recalculated the costs of producing a
hog in a contractual three -site
production system and have
determined that a three -site integrator
must receive $1.65 per kg just to
break even. In the last five years we
have only had a few months when we
have seen $1.65/kg or more."
In determining these figures. Ross
calcu!ated the following prices:
Contract price: 5 kg SEW piglet $42.00
Nursery rent: $6.85
Nursery feed:
Trucking to Nursery Barn:
Subtotal:
$12.00
$1.50
$62.35
5% culls and nursery mortality: $3.12
Cost of 25 kg. grower/finisher pig: $65.47
Trucking to grower/finisher barn: $1.50
Growing/finishing barn rent and bonuses
$20.00
Growing/finishing feed $65.00
Subtotal: $151.97
2% growing/finishing mortality $3.04
Subtotal: $155.01
Trucking to packer and
other OPPMB deductions: $2.91
Final cost: $157.92
"Assuming that it costs $157.92 to
produce a market hog, the break-even
price is $1.65/kg. based on an 87 kg
carcass with a 110 index," Ross
wrote.
Based on those projections, Ross
foresaw other integrators giving up
on three -site loop system. Already,
he noted, the large Farmland farmer -
owned co-operative declared
bankruptcy last year; Tyson Foodts
had extricated itself from its money-
losing hog -growing business,
Murphy Farms, once the largest
producer of hogs in the U.S. had scold
out to Smithfield's and Saskatchewan
Wheat Pool was greatly reduced in
size in part because of losses in its
pork production operation.
Using the six -month -notice time
in his company's five-year contracts,