Hog Sector in 2025 Faces Uncertainty Amid Tariff Concerns
The outlook for the Canadian hog sector in 2025 appears promising, with strong futures prices, steady exports, and lower feed costs boosting margins – except of course, for the possibility of tariffs and vCool.
However, challenges remain, particularly in domestic demand and the possibility of U.S. tariffs and voluntary country-of-origin labelling (vCOOL) policies.
Today is tariff day, the day the US administration will announce its tariffs on Canada. FCC is predicting that if tariffs are imposed, hog prices could decline by approximately 10%, affecting producers reliant on exports to the U.S.
A weaker Canadian dollar has helped raise hog prices, keeping them above the five-year average. If the dollar continues to depreciate, farm revenues could increase, but feed costs may also rise. FCC estimates that a 1% drop in the Canadian dollar boosts farm cash receipts by about 0.6%. Even with potential tariffs, hog prices would remain close to last year's levels and above historical averages.
Lower feed costs are contributing to improved margins for hog farmers. FCC research indicates that corn and barley prices in 2025 are expected to stay below their five-year averages, helping farrow-to-finish operations achieve their best margins in years. However, if hog prices drop due to tariffs, margins could return to near breakeven.
Consumption of pork in Canada declined in 2024, with consumers shifting towards other proteins as pork prices increased. FCC is predicting that while demand remains steady, consumption fell by roughly 12% year-over-year due to higher costs. This presents a challenge for the industry, which is heavily reliant on exports.
Globally, pork consumption has grown by 2% since 2018, with significant increases in markets like Mexico and South Korea. FCC reports that Canadian pork exports grew by 2% in 2024, with strong sales to Japan, Mexico, and South Korea.
However, exports to China declined significantly, and the U.S. remains Canada’s largest market.
FCC is predicting that if U.S. tariffs are enacted, Canadian pork exporters may need to lower prices or seek new markets to remain competitive. Expanding exports to regions like Mexico and South Korea could help offset potential losses. The industry must adapt to evolving trade policies to sustain growth in 2025.