In an effort to help those who supply its processing plants with hogs contend with higher feed costs, Maple Leaf is allowing contracted producers in Manitoba and Saskatchewan the option of reverting back to previous lighter finishing weights.
Increasing feed grain costs, due to the impact of the U.S. drought on U.S. corn production have dramatically impacted the profitability of hog producers and have been blamed for two of western Canada’s largest producers filing for bankruptcy protection in recent weeks.
According to the Saskatchewan Ministry of Agriculture’s weekly hog report for October 1st, despite improving from September’s lows, cash hog prices continue to be well below producer’s production costs.
Jason Manness, Maple Leaf’s director of procurement for western Canada, says, under normal circumstances shipping heavier hogs is a win for the producer and a win for the packer but clearly we’re not under normal circumstances so producers are looking to get pigs out lighter to save on feed costs.
As one of the largest hog producers in Canada Maple Leaf has a good understanding of the current economics facing hog producers.
Before the current feed crisis we implemented as a packer a heavier grid with our producers both in Manitoba and Saskatchewan.
We’re now providing these same producers the option to move back to the previous lighter grid through this challenging period.
Under normal circumstances shipping hogs at heavier weights, providing producers have room in their finishing barns, is a win-win for both the producer and the processor but currently we do have producers looking to ship lighter weight hogs given the current economics.
This can fluctuate significantly given the volatility of the markets.
Manness adds, in additional to adjusting grid weights, Maple Leaf will continue to look for other ways to assist producers through this challenging period and hopefully we’ll get back to profitable markets in 2013.
