Banff Pork Seminar Slated for Mid-January

“This Global Business of Pork” is the theme of the 2007 Banff Pork seminar slated for next week (January 16 to 19) in Banff, Alberta.

The Banff Pork Seminar attracts between 800 and 850 delegates from around the world each year and, with just under one week left before the conference begins, over 750 have already registered. The 36th annual seminar will focus primarily on global issues affecting Canada’s pork industry including competitiveness, productivity, issues related to improving Canadian agriculture policy and how the industry is doing on the world front, as well as matters that relate directly to local producers.

Demand for Financing in the Pork Sector Light

“It’s very quiet especially in terms of new construction of barns,” observes Lori Lane Farm Credit Canada’s business development manager for the central Alberta district and one of this year’s speakers. “In Alberta the permitting process is quite slow so that has really halted any kind of expansion but the big factor in both Alberta and Saskatchewan is trying to find labor, particularly in Alberta. We’ve got a booming economy in the oil and gas sector and agriculture just can’t compete for staff.”

She explains that some producers have been successful in recruiting foreign workers and says that they have been really pleased with the skills and the qualifications of the people they are getting. However, she points out the process can be very slow.

She goes on to say, “In Manitoba, of course, the Manitoba government put a ban on any expansion in the hog sector so that’s pretty much killed anything there.”

Lane notes the other factor, and this is an issue across the country, there is a lot of support for bio-fuels, ethanol projects and other similar projects and that is driving up feed costs so margins are getting a lot tighter in the industry.

Canadian Pork Producers Face Increased Challenges

Claude Bilodeau, an economist in agrifood financing with the National Bank of Canada and another speaker, agrees. “The world market for pork meat has been more difficult for the Canadian pork industry in 2005 and 2006 than what we’ve seen before.”

He explains the growth in the world exports has decreased and, even if Canadian production represents only two percent of the production world wide, Canada is a very large exporter with around 22 percent of the world exports for the year 2004 and therefore extremely dependent on the export market.

“50 percent of 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.”

Bilodeau adds that as a result of the decrease of the U.S. dollar relative to international currencies, Canada has become less competitive on the American and Japanese markets. As a result Canadian exporters turned to markets like Australia, Mexico and Russia. The international export trade has also seen the arrival of new international competitors in 2006 with Chile becoming a significant player.

In addition, the strength of the Canadian dollar has resulted in increased imports of foreign pork into the Canadian market. “Canada is less competitive in the export market and now we have some competition in our domestic Canadian market,” he says.

Competitiveness and Availability of Markets Viewed as Key

Dr. John Deen, an associate professor University of Minnesota’s College of Veterinary Medicine believes, “The major concern is competitiveness and the second is availability of markets.”

He suggests there are two competitive positions. The first is that there are different regions in North America with different capabilities and ability to utilize opportunities at hand. He explains, “In the United States we compare between the mid-west and eastern seaboard, [and] we compare between the eastern corn belt and the western corn belt and there are real differences. We also see some of those difference reflected when we look into western Canada and eastern Canada.”

“The second point is that if we look at the resources that we have available – how we use them and whether or not we consider the capabilities we have in designing our enterprises and deciding on which direction we’ll take in production – we have to get more complex in our analytic methods.”

Environmental Technology Continues to Generate Producer Interest

While the demand for capital for expansion has lagged, Lane notes, there has been interest in capital investment in bio-digesters, primarily in Ontario and a little bit in Manitoba. However she stresses that operations have to be of a scale that it’s going to make economic sense.

“It’s an emerging area of interest mostly in Ontario and Manitoba. We did see a little bit in Alberta a couple of years ago,” she says. “Part of what’s fueling the interest has to do with the environmental concerns, odors and that kind of thing. That was where it started a couple of years ago. Now I believe it's more to do with the cost of energy, power costs, heating costs that kind of thing.”

“The bio-digester produces power and heat to run the barn and also recycles the water. From the point of view of water conservation it’s actually very effective. From what I understand most of the producers are using the recycled water more for wash down as opposed to for consumption but, from what I’m hearing, the water filtration systems are fairly effective.”

Cost of Production Drives Competitiveness

Bilodeau stresses that while there is no one strategy for success, producers who are able to keep costs in line tend to be more successful. “The best business plans are with producers with a low cost of production. So what we’ve seen is to be successful in that industry you need to be a low cost producer.”

“What we have seen in our experience, the top 20 percent of the producers, those low cost producers 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.”

He believes that's where producers always have to focus, to improve their productivity on the farm and to make good decisions on investment. That way they’re better positioned to take advantage of opportunities during the low end of the price cycle.

Improved Coordination Also a Factor

Dr. Deen recommends increased coordination throughout the production chain as one approach to optimizing production. He suggests making sure the different input suppliers, the different phases of production such as the sow unit, the feed mill, the nursery and grow-finish barns actually have common aims and they understand how their product is related to the product in the immediate previous phase. As an example he cites weaning age.

“Many producers are increasing their weaning age, not because it helps the sow herd be more productive, but we found that weaning age improves the productivity of pigs in the nursery and grow-finish barn. People are surprised about that and it really reflects the fact that we didn’t really understand how to optimize the decisions in the sow unit to get the best productivity across the whole system so optimizing on that basis is important.”

Pre-registration for the Banff Pork Seminar is still open. The telephone number to call for further details or to register is 780 492-3651. Delegates may also register through the seminar's web site at www.banffpork.ca.

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