WINNIPEG, Manitoba – Higher raw meat costs for packers appears to be a long-term trend as Canadian hog farmers struggle to recover from money-losing operations, the head of a leading Canadian hog processor, Maple Leaf Foods (MFI.TO), said on Wednesday.
"We actually think it is a new normal," said president and CEO Michael McCain at the BMO Capital Markets Agriculture, Protein & Fertilizer Conference in New York. "Higher protein costs are here to stay, they're not going to go backwards for the foreseeable future."
Hog producers were losing C$40 ($38) per pig in 2009, a situation that's not sustainable, McCain said.
Canada's farmers are sharply reducing the size of their herds as a higher Canadian dollar, volatile feed costs and a reduction in U.S. demand for live hogs due to the U.S. meat-labelling law have caused them to lose money.
Rising raw meat costs, along with a weak performance from Maple Leaf's bakery business, caused its first-quarter profit to miss expectations last month.
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