Introduction

Manitoba's agriculture industry has changed significantly in recent years. More than two decades ago, Manitoba saw its cattle slaughter industry move elsewhere. Canadian grain transportation subsidies were removed in the mid 1990's. This was significant, since the province is located a considerable distance from all weather coastal ports. Options to stimulate value-added activities and provide ways to use grain produced in Manitoba were investigated. Pig production and pork processing were identified as a way to add value to grain.

Manitoba Agriculture, Food and Rural Initiatives is strongly committed to the pork industry. The province is building the best possible environment for stable, long-term development, including a flexible marketing system, competitive tax regime and strong infrastructure. Sustainability of the pork industry is one of Manitoba's highest priorities.

Pig Production Notes: Pig production has increased more than sevenfold from 870,000 in 1975 to 7.3 million currently. Manitoba is now Canada's third largest pork-producing province with about 24 per cent of national production and about six per cent of North American production. Pig production is the most valuable agricultural commodity in Manitoba, worth about $792 million (Canadian dollars) in 2003. There are 16,000 to 17,000 people employed by the pig industry in Manitoba. Economic spin-off to the provincial economy is estimated at $2 billion.

Along with the growth, Manitoba's pig industry has seen changes in overall structure. As in many parts of the world, pig farms are generally fewer in number and larger in size. Manitoba's pork industry is built on a base of 1,668 commercial pig operations (Statistics Canada 2001.)

Of the 1,379 farms with more than 20 pigs per farm, only 456, or about 33 per cent are traditional farrow to finish facilities. However, these farms still house more than 50 per cent of the pigs in the province (Table 1).

Farms containing 500 sows or more now house more than 80 per cent of our sow herd. The trend toward larger operations is expected to continue. There are still many small farms with fewer than 100 sows but these farms had only 4.3 per cent of Manitoba's sows. Conversely, the 75 units with more than 1,000 sows each averaged 2,170 sows per unit and accounted for 56.4 per cent of the sows in the province and 29.7 per cent of the total pigs in the province. The sow herd continues to increase with the most recent estimate at approximately 346,000 (MAFRI, April 2004.)

Industry Growth

Pig production continues to increase in all regions of rural Manitoba. Data collected by Manitoba Agriculture, Food and Rural Initiatives indicates that, for the past nine years, an average of 26,227 sow places and 97,938 feeder pig places were built each year. Pig production companies have driven much of the expansion. Significant growth has also been achieved by individual producers and members of the Hutterite Brethren.

The province has sufficient agricultural land for expansion of pig production facilities and environmentally sound manure disposition. The pork industry has experienced the same public concerns about large-scale pig production as those encountered in other regions of the world. Concerns about odour, food safety, animal welfare and environmental degradation have been expressed and research efforts continue to ensure these issues are addressed in a responsible manner. Government and industry have developed a set of guidelines, regulations and services to protect the environment and the long-term viability of the industry. Local governments are encouraged to develop land use plans that accommodate livestock expansion while ensuring harmonious development. Manitoba Agriculture, Food and Rural Initiatives assists by providing guidance and technical expertise.

Provincial law also ensures fair treatment of agricultural producers. The Manitoba government has enacted legislation to protect farmers from unfounded complaints, and works with the industry to develop reasonable guidelines for agricultural production. This practical, proactive approach to sustainable development will ensure Manitoba's pork industry remains competitive and growing, long into the future.

Most facilities use earthen manure storage structures designed by engineers to store manure. These storages often require a one-metre base of compacted clay or a synthetic liner to minimise the movement of nutrients into the underlying soil. Regulations require that the storage be sized so that all of the manure can be used as a fertiliser.

New, large operations must have the capacity for at least 200 days of manure storage because winter spreading is prohibited. In Manitoba, a large operation is defined as an agricultural operation with at least 300 Animal Units in a category of livestock. An Animal Unit is equal to the number of animals required to excrete 73 kilograms of nitrogen in a 12-month period. For example, farrow to finish facilities with 320 or more sows or a grower-finisher pig facility with more than 2,800 feeder pigs are considered large operations. Existing, large operations had to comply with the prohibition on winter spreading by November 10, 2003.

Climatic conditions sometimes prevent spreading manure at a desired time, thus most facilities voluntarily design their storage to have 400 days capacity. Farms with more than 300 Animal Units must file annual manure management plans with the government indicating where they will be spreading their manure. The plans, which are based on the nitrogen requirements of the crop receiving the nutrients, must be provided 60 days prior to spreading the manure.

The industry has incorporated advances in equipment, innovative building design, intensive use of computer systems and modern, healthy genetics into routine production. Accredited training programs for barn managers and technicians have been developed. Lack of workers, especially trained workers, is an ongoing concern. Methods such as all-in/all-out production, segregated early weaning, phase feeding and the use of straw-based hoop barns at some grower-finisher facilities increased industry efficiency. As a result, Manitoba pig production is among the most cost effective in Canada.

Buildings

Although a significant number of producers, especially those with grower-finisher pigs, are using lower cost, straw-based, hoop-style pig housing, most commercial pig production in Manitoba takes place within a year-round controlled environment. Controlled environment buildings are specifically designed and equipped for the gestation, farrowing, nursery, growing and finishing stages of pig production. These buildings are typically wood frame structures on concrete foundations with earthen manure storage structures. The average building cost for a farrow-to-finish operation, including all equipment is $4,500 to $5,000 per sow. For grower-finisher buildings, construction costs range from $260 to $275 per pig place. Hoop-style facility construction costs from $80 to $100 per pig place. Total new and expanded barn construction in 2003 was valued at $60 million.

Feeding Programs

Manitoba pigs are usually fed barley-based rations. Other major feed ingredients include canola meal, soybean meal, field peas, corn and wheat. Phase feeding and the use of wet-dry feeding systems are becoming more common.

One factor strengthening Manitoba's pork production industry is the growing involvement of major feed companies. With feed rations becoming more critical to efficiency, feed companies have a greater role in primary production. The feed industry's involvement can include infrastructure support services such as veterinary advice and consulting, financing, engineering, breeding stock input, production contracting and turnkey investment support.

The pig industry has had to contend with Fusarium mycotoxin problems for the past several years. Fusarium graminearum has been found in many crops grown in the eastern Prairies. Pigs are particularly sensitive to deoxynivalenol (DON), a mycotoxin produced by F. graminearum. Feed intake is reduced, performance suffers and contaminated feeds are rendered unsuitable for the pig industry. Research efforts are underway to develop long-term solutions to this problem. Until then, DON-free grains are imported, either from provinces farther west or from the United States, and this increases feed costs for Manitoba's producers.

Genetics and Breeding Stock

Many commercial pig-breeding companies, both national and international, are active in Manitoba. Artificial insemination is becoming the most popular method of breeding. Slaughter pigs consistently produce pork with an average lean yield of about 60 per cent, as determined by the Canadian national carcass grading system. The most common breeds used in Manitoba include Yorkshire or Large White, Landrace and Duroc. Because of commitment to quality, Manitoba pork products and genetic stock are in demand around the world.

High Health Status

Manitoba shares Canada's widely recognised reputation for the extremely high health status of our livestock. As a result of the province's cold winters, low pig densities and superior management practices, Manitoba has a low disease status and is permitted access to many foreign markets. Manitoba's pig population is free from hog cholera and all major diseases such as African swine fever, foot and mouth, swine brucellosis, pseudorabies and trichinosis.

Pork Processing

Manitoba has a growing pork processing sector. Only meat products originating from federally registered and inspected plants can be exported outside of Canada. The pork industry has adopted the Canadian Quality Assurance Program for pork producers.

Maple Leaf Pork built a state-of-the-art processing plant that opened during 1999 in Brandon, Manitoba. The largest in Manitoba, this plant can process 45,000 pigs per week in one shift and has the capacity to double that production by adding a second shift. It currently employs about 1,150 workers and would require another 1,000 workers to operate a second shift. When combined with the other processing plants in the province, the slaughter capacity in Manitoba is about 6.9 million head per year.

Although some might suggest that the province is getting close to its pig production limit based on the current slaughter capacity, Manitoba has become a major exporter of weanling pigs to the United States. Approximately 2.64 million pigs weighing less than 23-kilograms, live weight, were exported to the United States in 2003. In effect, Manitoba is establishing two pig industries-an industry to supply slaughter animals both locally and internationally, and a weanling industry to supply grower-finisher barns in the United States.

Pigs, Pork Markets and Marketing Systems

In recent years, pig producers in Manitoba have had the option to market pigs through brokers or directly to processing plants. They can enter into direct agreements and contracts with processing plants or they can buy and sell through brokers such as the Manitoba Pork Marketing Co-op or other agents. Marketing for 2003 totalled approximately 7.3 million head, of which more than 3.78 million head were exported from the province. Approximately 1.14 million slaughter pigs and 2.64 million weanlings were exported directly to the United States. About 52 per cent of all pigs sold in Manitoba were either shipped to other provinces or exported to the United States. About 3.67 million Manitoba grown pigs were slaughtered in the province.

Overall, 4.43 million pigs were slaughtered in Manitoba in 2003, including about 0.76 million pigs from other Canadian provinces. The average carcass weight of a slaughter pig is about 91 kilograms, which is equivalent to about a 114-kilogram live weight animal. An estimated 400 million kilograms of pork and pork products were produced in Manitoba in 2003.

Manitoba is the largest exporter of live pigs in Canada and is the second largest pork-exporting province after Quebec. The majority of live slaughter pigs were exported to processing plants in South Dakota, Wisconsin and Iowa. Most weanlings were sold to feeding operations in Iowa, Minnesota, Nebraska and South Dakota. Combined, these exports of live animals were worth about $274.9 million.

About one-quarter of the pork produced by Manitoba plants in 2003 was shipped to other provinces in Canada. Manitobans only consumed about eight per cent of the total pork produced in that year. In addition, about 190 million kilograms of pork and pork products, valued at $437.5 million, were sold directly to more than 30 countries. The United States is Manitoba's largest export market for both pork and exports of live weanling pigs. Manitoba also exports large quantities of pork and pork products to Pacific Rim markets such as Japan, Korea, and Hong Kong.

Tariff-free access to North America

Manitoba offers an open door to the United States and a strategic central location at the heart of the continent. With its advanced transportation and communications networks, the province is the ideal gateway to the North American market. Under the Canada-U.S. Free Trade Agreement, companies investing in Manitoba gain virtually tariff-free access to the U.S. market. The North American Free Trade Agreement (NAFTA) extends this access by including most foods and services as well as entry to Mexico.

Most Canadian food and beverage exports already enter the U.S. duty-free. The remaining duties will be eliminated under the schedule set out in the Canada-U.S. agreement. These provisions will continue to govern bilateral trade in food and agriculture under NAFTA. NAFTA is unique in that it opens the large U.S. and Mexico markets to any venture established in Manitoba. Any investment made in Manitoba will now provide access to the entire North American market.

Return on Investment

The expansion of the Manitoba pork production industry has been bolstered by good rates of return on investment capital. According to industry experts, the return on assets is typically between 10 to 15 per cent in a well-managed Manitoba swine operation. The following table shows the historical return on assets for a modern, well-managed swine operation in Manitoba. This analysis is based on average market prices, feed costs and other inputs from 1997 to 2003.

Market price is the average pork price per 100 kilograms carcass at Index 100. Return on assets = (net income before interest expenses and income taxes) Assets = market livestock inventory, breeding stock and land plus the initial capital cost of buildings and equipment. Assume that the investment was $225/pig.

Summary

Manitoba is one of the most dynamic sites in Canada for pig production and is a Canadian leader in pork production and processing. Government and industry continue to work together to ensure the success of the pork industry in Manitoba. There are opportunities to expand this industry, providing environmental, natural and human resource concerns are addressed to ensure the sustainability of the industry.

Source: Manitoba Pork Agriculture, Food and Rural Initiatives - June 2004