Canada’s quarterly Hog Statistics Report, released last week, confirmed expectations that the swine herd continues to shrink, but the breeding herd reduction was smaller than I had expected given the Canadian herd buyouts of 2009.

Stats Canada estimates that Canada’s herd numbered 11.63 million head on Jan. 1, 5.5% smaller than last year’s 12.18 million head. The largest Jan.1 swine herd was in 2006, when Canadian farms had 15.11 million head in inventory.

The reduction was relatively balanced, with eastern herds having 6.974 million head, 5.2% fewer than last year, and western herds having 4.836 million head, 3.6% fewer than last year. Inventories declined in all of the major hog-producing provinces (Quebec and Ontario in the east and Alberta, Saskatchewan and Manitoba in the west). The smallest decline (1.9%) was in Manitoba and the largest decline (7.6%), interestingly, was in Quebec, the province with the highest levels of government support for producers.

Canada’s market hog inventory (called “All Other Pigs” in the Hog Statistics report) was 5.5% lower than one year ago at 10.295 million head. The fact that the declines in market inventories and the breeding herd are reasonably close in magnitude indicates the declining role of feeder and weaner pigs exports to the United States. There was a time that a larger breeding herd and lower stocks of market pigs were common. Not so now.

Figure 1 shows the year-on-year change in the quarterly breeding herd estimates for Canada, the United States and the two combined herds. Figure 2 shows the actual sizes of the separate and combined herds. The U.S. herd is now 6.2% smaller than at its cyclical peak of December 2007, while the Canadian herd is 18.3% smaller than its all-time high of 1.634 million head in January 2005. The combined herd is at 7.185 million head, 7.4% lower than at its peak in December 2007/January 2008.

Sow-Pig Numbers Don’t Jibe
Statistics Canada pegged the Jan. 1 breeding herd at 1.335 million head, 4.3% lower than one year ago. I’m a bit surprised by that number given the buyout programs and continued poor financial circumstances for Canadian producers. The Canadian herd was 4.8% smaller than last year in October and I really expected that percentage decline to grow slightly with the January report after last year’s difficulties with exports and H1N1 in the United States left prices for both countries disappointingly low.

Further, the report contains two items that, to me, do not fit with a “down 4.3%” breeding herd at all. October-December farrowings were estimated to have been 724,600, 7.9% lower than last year while the Oct-Dec pig crop was estimated to number 7.804 million head, 7.7% lower than last year (see Figure 2 and 3). Those numbers do not fit together well at a time when U.S. producers are increasing productivity at a record pace. I realize that the Canadian herd was generally more productive to begin with, but these numbers suggest a big reduction in efficiency unless some other factor is at work.

That “other factor” could be that there were sows in that count that were never bred last summer and fall or that are awaiting the last buyout tender. The first would have left the pig crop lower than normal and the last could mean an inflated sow herd figure. But with feed costs still high, and the retroactive feature of the government’s transition program, I’m not sure why anyone would keep extra sows around.

I’ll remain suspicious of the sow herd estimate until I see more data. This same thing happened two years ago, I believe, and Statistics Canada later released revisions that brought the sow herd estimate much closer to the pig crop and farrowing numbers.

Finally, the decline of both countries’ pig numbers (Figure 4) does not necessarily mean lower production. Figure 5 shows quarterly production in carcass weight for each country and for both combined. Canada’s output has been within 50 million pounds of 1 billion pounds/ per quarter since 2002. Even as pig numbers have fallen, Canadians have continued to produce the same amount of pork. Meanwhile, higher productivity and imports from Canada pushed U.S. production higher and higher – until last year. Note the leveling of the U.S. and “total” trends since the circovirus vaccine -induced jump in output in late 2007.

Click to view graphs.

Steve R. Meyer, Ph.D.
Paragon Economics, Inc.
e-mail: steve@paragoneconomics.com