Alberta Pork’s 2019 Cost of Production Study final report is now available, highlighting the struggles that many producers are facing to sustain their businesses and support the Canadian pork value chain.
Last year, Alberta hog farmers were invited to volunteer cost and revenue data to help create a benchmark for farm profitability. Based on the survey results, the average total cost of production was around $198 per market hog sold, while farm revenue averaged just over $192 per market hog sold, resulting in an average loss of more than $5 per hog. This discrepancy indicates that producers should be cutting production, rather than investing in barns and expanding production.
As expected, feed cost was the largest contributor to total costs, representing 63 per cent of total costs or 83 per cent of operating costs. Grains tended to be the largest cost component of feed. This primary cost driver is anticipated to have grown in 2020 and is anticipated to continue growing in 2021, as grain prices rise.
In 2020, some positive pricing changes were made. Alberta Pork has once again requested producer participation in the 2020 initiative to help determine how, on average, these pricing changes and other market conditions have affected profitability.
For further discussion on economic issues related to Alberta pork production, check out these articles:
- Feed costs affect a producer's bottom line (December 21, 2020)
- Olymel's 2021 contract: how does it stack up? (December 9, 2020)
- BRM still important despite barriers (October 21, 2020)
- Price negotiating power balance hurts producers (September 21, 2020)
- Low pig prices prompt production cutbacks (August 25, 2020)
- Price indexing: does it pay to produce better-quality pigs? (July 23, 2020)
- Hog price calculator now available (July 22, 2020)
- Sharing the value of western Canadian pigs: an update (July 17, 2020)
- Economic tools highlight a system in need of change (May 5, 2020)
For more information on Alberta Pork’s cost of production study, contact Bijon Brown, Production Economist, Alberta Pork by email at firstname.lastname@example.org or by phone at 780-440-8460, toll-free at 1-877-247-PORK (7675).