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Pork Powerhouses 2000: Sow Herd Building Again

This time it’s Canada making the move

You need only look north to see where dirt is moving in the pork industry. A few years ago we looked south to North Carolina, Texas, and Oklahoma. No longer. While the big boys down there are sitting on their hands, stymied by a myriad of new laws and regulations, the Canadians are dreaming big. Click here to view the Pork Powerhouses ranking list. 

(Photo: This barn in southeastern Manitoba, Canada, will house sows for Elite Swine. The company, owned by packer Maple Leaf Foods, has 58,600 sows today and plans to add 18,000 a year for the next three years.)

“All of the sudden we look around and see that we will likely have new shackle capacity for over 7 million hogs per year than we had one year ago,” says Paul Schneider of Elite Swine in Landmark, Manitoba. “Everybody wants to grow.”

Canada joins the ranking

Welcome to the seventh annual Pork Powerhouses of the largest producers. You’ll notice a few differences this year. For the first time, we are ranking all of North America, including Canadian operations. That scrambles the ranking a bit for U.S. producers and drops a few off the bottom. We feel it is important to include Canada because the hog market is truly a North American market.

Adding a sow in Canada has an effect on U.S. markets, especially when the sow resides at farms such as Hytek in Manitoba, which sends half its pigs from 20,000 sows to the U.S> for finishing. Or Premium Pork in Ontario, which sends every weaner off 20,000 sows straight to Iowa. (It should be noted, however, that growth plans by both these companies focus on finishing and marketing pigs in Manitoba, not the U.S.)

Genetic suppliers out

Another change to our ranking is that we’ve booted off the breeding stock companies. While PIC, Danbred, DeKalb, Genetiporc and Newsham all own or contract enough sows to make the ranking, we feel limiting the list to commercial pork producers is more relevant to the hog market.

Also, we split up Farmland and Alliance Farms. In the past, both were managed by Farmland, but by November 1, Alliance will have new management, says Farmland.

You’ll notice a few folks missing off the list. In June, The Lundy Packing Company and its hog production operations (about 40,000 sows) was purchased by Premium Standard Farms (owned by ContiGroup Companies).

Last February, Seaboard Farms purchased D&D Farms, which owns 20,000 sows near Holyoke, Colorado.

Almost made it

Other large U.S. pork producers that fell off the bottom of our ranking due to the inclusion of Canada, include:

  • CalAdCo, Renville, Minnesota, 11,500 sows
  • Kalmbach Feeds, Upper Sandusky, Ohio, 11,400 sows
  • JDH Farm, Lititz, Pennsylvania, 11,200 sows (owner Jerry Hostetter also manages another 11,700 sows for Pleasant Valley Foods)
  • L.L. Murphrey, Farmville, North Carolina, 11,000 sows (Murphrey filed bankruptcy in June, but is still producing hogs)
  • MFA, Inc., Columbia, Missouri, 10,500 sows

Of course, even with the introduction of Canadian firms to our ranking, Smithfield Foods still laps the field several times. But the giant U.S. packer has acquired no hog production operations in the past year and has little expansion under way except in its Circle Four unit in Utah.

More acquisitions are always a possibility with Smithfield, but true sow expansion in the company’s existing production units may only come in Mexico and South America.

And Canada? Smithfield owns pork packer Schneider Corporation, based in Kitchener, Ontario. While Schneider CEO Douglas Dodds says, “We have no plans to go into production,” he admits, “There aren’t enough pigs in Canada right now” to complete Schneider’s planned expansion of their Winnipeg packing plant from 35,000 hogs killed a week to 90,000.

“The hogs are not there today,” says Dodds. “We need the hogs to support our expansion.”

Will the hogs come?

Yes, says Dodds. “There is a desire by Canadian producers to grow. More and more grain farms are moving up the protein chain and feeding grain rather than shipping it. And Manitoba and Saskatchewan have some of the lowest production costs in the world.”

While the largest U.S. producers on our ranking added about 50,000 new sows to the breeding herd since last fall, that same amount has been added or is in the process of being added by the largest 15 producers in Canada.

“We live in a sea of cheap feed grain,” explains Florian Possberg, CEO of Big Sky Farms in Humboldt, Saskatchewan. “This area should be a natural for expanding the industry.” (Big Sky feeds its hogs barley, wheat, peas, canola meal and soybean meal.) The company has 9,000 sows and another 10,000 under construction today, permits in hand.

“By this time newt year, we will have 18 or 20,000 more sows,” says Elite’s Paul Schneider. “When will we stop? I’m not sure. When will the shackle space is full, we will take a breather and reevaluate our plans.”

Fill the kill

Filling the plant is the goal at Premium Brands (formerly Fletcher’s Fine Foods) of Vancouver, British Columbia. The packer has made several investments in the past year in pig production. George Paleologou, chief financial officer, says the company has the capacity to kill 16,000 hogs a day in two shifts at its Alberta plant, but because there are not enough hogs, it is only killing 6,000 a day.

“A large area of Alberta and British Columbia is welcoming hog expansion,” says Paleologou. “We are a competitive place to grow pigs and very underdeveloped. There is lots of feed grown here, and it’s not that difficult to get permits and land to raise hogs. It’s one of the only places left in North America to grow in hogs.”

Road blocks up north, too

However, there are challenges in Canada, similar to what has slowed sow growth tot a crawl in the U.S.

“A lack of trained labor is why we are slowing our expansion process,” says John Koslowsky at The Puratone Corporatiton in Manitoba. “It’s no use having facilities without proper management.” The five-year expansion plan for Puratone, he says, is growth from 23,000 to 42,000 sows, “but the exact timing of that is unclear.”

In Manitoba, getting a building permit “is more challenging than it used to be,” says Don Janzen at Hytek in LaBroquerie. “We would like to build more, but we have to jump through more hoops.” Hytek added 4,200 sows in the past year and “wants to do the same this year,” says Janzen.

Cautious optimism is the mood on both sides of the border. Feed is cheap, disease levels low and productivity high. Everyone waits to see how the market reacts.

Crankin’ out more and more pigs

Cheap feed. Low disease levels. What’s it mean?

“Substantially more tonnage,” says Minnesota producer Bob Christensen. The real question, he says, is not how many sows the industry has added this year, but how much more productive those sows have become.

“Companies are not growing as fast now, so they are focusing more on production” says Christensen, who owns 74,000 sows. “It’s a big challenge to increase productivity when you are growing 40% a year. Once you quit growing, you focus on doing a better job with what you have.”

Better and better

Sow productivity industry-wide continues to grow by four-tenths of pig per sow each year, says Bob McCulley, who owns 18,000 sows with TriOak Foods in Iowa. “I thought that might slow last year because the sow herd was getting older, but I was wrong.”

If you take the nation’s 6.2 million sows and multiply by last year’s production per sow, says McCulley, “we shouldn’t have a problem with oversupply for another year. But that’s not the case. We are jammed up on pigs.”

We haven’t neared the end zone on potential either, says Jim Pillen, veterinarian and owner of 30,000 sows with Progressive Swine Technologies in Nebraska. While we may be nearing the biological limit to pigs weaned per sow, says Pillen, we haven’t tapped the potential to grow weaned pigs to market.

“People are losing 8-10% of pigs after weaning,” he says. “That is substantial. We’ve got the sow part down good; we’ve made that click. But we don’t yet have the ability to grow baby piglets.”

It’s a pound of pork marketed – not weaned – game, says Pillen. “Pigs per sow per year is an obsolete number. We should be focused on how many pounds we slaughter per sow per year.”

Everyone is talking about great reproduction, and yes, “that has gotten good,” he says. “But if the pigs don’t stay alive, it doesn’t mean much.”

Once we’ve tapped the “astronomical opportunity” to improve weaned pig survival and growth, says Pillen, then the industry will really have a tonnage problem.

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