2008 Banff Pork Seminar
Where in the world do we grow pigs?Date posted: January 17, 2008
Although growing global affluence will likely mean growth opportunities for the world's pork producers, the question for Canadian pork producers is where in the world pork will be produced, say two leading analysts of the global pork industry who spoke at the 2008 Banff Pork Seminar. Banff Pork Seminar is a key agricultural Seminar featuring presentations on the major issues facing the industry today.
Sustained global income and population growth is set to drive an increase in meat consumption that will fuel both meat production and trade, says Fiona Boal of Rabobank International, the world's largest food and agribusiness bank.
"Meat production is expected to reach 251.8 million tonnes by the end of the decade while trade is likely to reach 22.8 million tonnes over the same time period," she says.
"For Canadian hog producers, gaining an appreciation of the global pork market, especially the emergence of new hog production regions, is key to assessing the future profitability of the industry.
"We've already seen significant shifts in where pork is produced with significant declines in production for the EU-25 and dramatic gains for China. How and where a handful of animal protein multinationals choose to make investments will determine which new pork production regions emerge to challenge traditional exporting countries such as Canada."
From an export perspective, a growing sense of protectionism among countries in the EU-25 may pose a challenge to Canadian exporters of pork, says Boal. However, animal disease and other challenges facing the domestic pork industry in China, one of the biggest markets for pork in the world, may present an export opportunity, she says. "At least in the next year or so, China needs meat. They'll need to import meat even if it's not their preferred solution."
The pork market in North America is currently in rethink mode, says Steve Meyer of Paragon Economics in Iowa, with the U.S. likely to remain a major player in the world pork market. "Most producers have little or no debt and some have sizable cash reserves," he says. "Many bankers believe U.S. producers have considerable staying power should cyclical losses be longer than usual."
The U.S. is also witnessing the demise of the over 200-year-old U.S. hog cycle, which has traditionally seen prices increase for two years and then decline over the following two years, says Meyer. "There is little on the horizon in this high-investment, climate-controlled, high fixed cost industry that would make the revival of the cycle probable."
At the same time, the U.S. faces challenges similar to the Canadian pork industry, such as policy direction and the changing world energy situation. "Corn availability could well become an issue for industry expansion," says Meyer. "However, many grain farmers are starting to question the wisdom of using corn for ethanol instead of feed for pigs simply because ethanol doesn't produce the valuable crop nutrients found in manure."
Nothing is having a greater impact on current profitability and future plans than the growth of corn based ethanol production in the U.S., says Meyer. "But all is not well in ethanol land. Higher corn prices and larger ethanol supplies are squeezing profit margins enough that several small plants have ceased operations and plans for two plants have been scrapped."
Held since 1972 in Banff, Alberta, the Banff Pork Seminar is coordinated by the Department of Agricultural, Food and Nutritional Science, University of Alberta, in cooperation with Alberta Pork, Alberta Agriculture and Food and other pork industry representatives from across Canada. Program and proceedings of the Banff Pork Seminar are available on the Seminar Web site, www.banffpork.ca.
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