Canada's second-biggest hog producer, Big Sky Farms, has entered receivership as the North American hog industry struggles under the bruising costs of animal feed, according to a report by Reuters.

Big Sky Farms, based in Humboldt, Saskatchewan, produces roughly one million pigs annually and accounts for 40% of Saskatchewan's total hog production.

Under receivership, an outside party controls a company until it can restructure its debt or be sold, says Neil Ketilson, general manager of Sask Pork, an industry group run by hog farmers.

Ketilson says he has spoken with Big Sky Chief Executive Casey Smit on Monday, and the company would operate for now with no plans to lay off staff or liquidate its pig inventory. He said the receiver would ensure that there was money to feed the pigs.

A severe drought in the United States has decimated crops, which has led to higher costs for feedgrains.

In an interview with the Manitoba Farm Journal, Smit says the drought is driving up feed costs, and Big Sky was losing C$40 to C$50 on every hog it sends to market.

"It really leaves the company with very few options," he says.

Corn, barley and wheat prices are leading many North American hog farmers to liquidate their herds and send more pigs to slaughter, resulting in lower U.S. hog prices, Ketilson says."It's all about the drought in the United States,” he says. “If it hadn't been for that, I think the guys would have been just fine.”

If Big Sky, established in 1995, were to liquidate its herd, the broader Western Canadian hog industry would be hit hard, including feedmills, truckers and hog processors. Big Sky is one of the suppliers for packing plants owned by Maple Leaf Foods and Olymel. Canada is the world's third-largest pork exporter.

Big Sky filed for bankruptcy protection in 2009 after a similar run-up in feed costs and restructured its business.