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Low Cost of Production Key to Success in Canadian Pork Industry

by 5m Editor
12 January 2007, at 11:35am

CANADA - The National Bank of Canada says swine producers who are able to maintain a low cost of production have the greatest chance of success, writes Bruce Cochrane.

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Although Canada represents only two percent of world pork production, it accounted for 22 percent of world pork exports in 2004.

"This Global Business of Pork" is the theme of the 2007 Banff Pork seminar slated for next week.

Claude Bilodeau, with the National Bank of Canada and one of this year's speakers, observes growth in world export markets has decreased and in 2005 and 2006 it's become more difficult for the Canadian industry.

Claude Bilodeau-National Bank of Canada
50 percent of the Canadian pork production is exported and, because the Canadian consumption of pork is relatively stable, most of the increases we've seen between 2000 and 2003 had to be directed toward the export market.

As the result of the decrease of the US dollar relative to international currencies Canada becomes less competitive on the American and Japanese markets so our Canadian exporters had to turn to other markets like Australia, Mexico, mainly Russia last year and we've seen the arrival of new international competitors, mainly Chile in the year 2006.

And with the strength of the Canadian dollar we've seen Canadian pork imports, we've seen some increase last year so Canada is less competitive in that export market and now we have some competition in our domestic Canadian markets.

Bilodeau says, while there's no one unique strategy for success, the best business plans have stressed a low cost of production.

He says the top 20 percent of the producers, those low cost producers, have had very good success over the years and it's extremely hard for the producers with a higher cost of production to stay in business.

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5m Editor