Assurance of Profits Needed to Encourage New Hog Barn Construction

Aug 21, 2014

The chair of Sask Pork says the province's pork producers will need assurances of long term profitability to justify new hog barn construction.

Live hog prices this spring and summer have been running anywhere from 15 to 40% higher than year ago levels while feed prices have softened over the past year resulting in record profits.

Florian Possberg, the chair of the Saskatchewan Pork Development Board, says there is interest among western Canada's pork processors in increasing hog production but producers will need to be confident that they'll be able to make a profit.

Clip-Florian Possberg-Saskatchewan Pork Development Board:
There is excess slaughter capacity.

We have really slaughter plants that could do significantly more hogs and we've got a number of processors that are encouraging producers to expand their finishing space.

Unfortunately our industry has went through a real rough spot between 2007 and 2013 where there was a lot of loses.

There was contraction of our industry, there was producers going broke and so there really needs to be a significant period of profitability to number 1, regain the equity lost during the down side and really just making money for the short term is not going to be enough to encourage producers to invest in facilities that are going to be around for 15 or 20 years.

We really need a solid business plan that shows that there's profitability into the future.

Possberg says there is interest in restocking empty sow barns and nursery and finishing spaces and that has been happening this summer.

He says we need to realize that the cost of building new facilities has escalated significantly since the last units were built back in 2005-2006 so it's going to take a real confidence boost to prompt significant new barn construction.

Source: Farmscape