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Higher Feed Costs Expected to Drive Many Pork Producers Out of Business

by 5m Editor
19 January 2007, at 9:26am

CANADA - The CEO of the George Morris Centre predicts substantial losses in the North American swine industry as animal agriculture adjusts to higher grain costs, writes Bruce Cochrane.

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Preliminary figures for 2006 indicate the US ethanol industry used 1.7 billion bushels of corn, or about ten percent of total production, and by 2010 that figure could double.

George Morris Centre CEO Larry Martin told delegates to the Banff Pork Seminar, because the by-products of ethanol production are less useful in swine and poultry diets than in cattle diets that puts hogs at a competitive disadvantage and the higher costs of feed with further erode profitability.

Larry Martin-George Morris Centre
Most of the research and practice so far says that the by-products, the soluble output from distillers dried grains or DDGs as they're usually referred to, that that's much more available to ruminants or cattle than it is to hogs and chickens.

Now there are going to be breakthroughs and things are going to change but most people I've talked to say they can get 30 percent of the corn replaced in a cattle ration with DDGs but about ten percent of hogs and so it means that hogs are at a competitive disadvantage as we go forward.

With corn prices rising, as of yesterday at least they were $4.20 a bushel in the US up from $2.19 back in September so you've got increasing costs, you've got less of the by-product available to hogs than to cattle so those two things together say we're in for a bit of a train wreck, I think, in the next little while in the hog industry because costs are going to go up so much.

Martin says, in the short term, we'll see many hog producers going out of business resulting in lower pork production.

However he predicts a return to profitability in the swine sector over the longer term, possibly by 2008, as grain growers gear up production to capitalize on the higher grain prices and as lower pork supplies push up the price consumers pay for pork.

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5m Editor