The General Manager of Manitoba Pork says the combined effects of African Swine Fever and COVID, last year’s drought and now the invasion of Ukraine have created an almost perfect economic storm for pork producers.
Cam Dahl, the General Manager of Manitoba Pork, says we’re seeing large swings in what farmers get for their product and in input costs.
We saw the impact of COVID and, while Canadian producers and processors have weathered COVID really quite well, that isn’t the case all over the world and so we’re seeing markets disrupted in places like China for example, significant shortages in containers and we’re seeing a disruption in the flow. What that means is that processors and shippers and exporters need to have more inventory just in case there are further disruptions so that comes with a cost.
Then we also have seen African Swine Fever that has had major disruptions in the world market. It’s hitting Europe, has devastated the Chinese pork production. Some of that has supported prices in Canada but we’re not quite sure how long that is going to last or how far ASF is going to spread so, again, significant uncertainty.
Then, of course, the third factor is war. The Black Sea has become a significant supplier of cereal grains and feed grains. 16 percent of world corn exports came from Ukraine last year, almost 15 percent of world wheat exports came from Ukraine last year. Already we were seeing high prices that were caused by the drought in North America and those high prices are only going higher because of the impact on supply of the Ukrainian invasion, so really almost a perfect storm.
~ Cam Dahl, Manitoba Pork
Dahl says we’re not sure when those grain prices are going to come back down so margins are being squeezed and pork prices remain volatile so risk management is becoming more and more important.