Farm Credit Canada says pork producers will need a prolonged period of stable returns to recover equity lost over the past three years.
Following three years of losses, returns for live hogs have improved dramatically over the past few months.
Farm Credit Canada senior vice president portfolio and credit risk Remi Lemoine says the down-turn has been quite long and deep and it will take some time to regain the equity that was lost over that period.
For now the situation has stabilized.
It’s going to take some time for each individual producer to reassess where they stand financially.
As always it’s a good idea to work with their creditors and their accountants to make some plans, reassess the situation and make some plans for the future as to what they need for operating and that sort of thing.
As you know the last three years have been severely impacted by not just price.
For awhile there grain prices were quite high, the exchange rate made it even more difficult and Country of Origin Labelling in the U.S. has significantly impacted the profitability of the hog sector.
Again the turn around is just starting and so the best way to look at it is things have stabilized.
We’re going to need a good couple of years of good prices, solid prices and on the cost side too it’s still a little unpredictable about feed prices and that sort of thing but our modeling now projects into the next couple of years that things should be relatively stable and barring any unforeseen fluctuations there the pork producers should have a good chance to recover a good part of that equity that was lost during the past three years.
Lemoine suggests, now that things have stabilized, it’s a good time for producers to talk to their financial institutions and accountants, do some number crunching, assess their financial situations and start making some plans for the future.
Source; Farmscape.Ca
