Craig Klemmer, an economist with Farm Credit Canada, said despite the prospects of higher feed costs and rising interest rates, there is room for cautious optimism within the pork sector. 
But as the Canadian economy recovers from the disruptions caused by COVID-19, livestock producers should prepare for higher interest rates and higher feed costs amid uncertain consumer demand and overall availably of product. 
In particular, Klemmer said the swine sector has gone through quite a wild ride with COVID disruptions and plant closures hurting prices as inventory rose. Next, good growth and some significant improvements in margins for the hog industry. But higher feed costs partially offset some of those margins.  
Sitting on that optimism came the news about the hog herd in China reaching near pre-pandemic levels that’s weighing down prices for producers so, moving forward, a mixed story. There’s uncertainty about what that global supply of pork will be. But skepticism surrounding some of the numbers is impacted pricing. 
At the same time, the industry removed the bottlenecks of processing, so that’s a reason to be happy and optimistic. There’s a strong demand for pork domestically and some disruptions creating opportunities for Canadian exports. 
“I think there are some things that are good like with other sectors; there are some that are watch out factors, high feed costs and trying to weigh what this overall global demand will do and what are those true numbers of inventory out there.” 
Klemmer said higher grain and oilseed prices would mean higher feed costs, being current in processing with good demand for beef and pork domestically and internationally. Hence, there is reason to be optimistic. 
However, farmers and the agricultural industry need to be aware of potentially higher interest rates when making future investments. 
Canadian farm debt increased by 5.9 per cent to 121.9 billion dollars in 2020, the smallest increase since 2014 while farm cash receipts climbed 8.3 per cent, but a rise in interest rates could impact the ability of farms to service that debt. 
Klemmer said revenue varies by sector, and there are signs of higher interest rates, but things are looking positive. 
In Western Canada, commodity prices support solid revenue, depending on the 2021 crop in various stages of drought stress.  
The grains and oilseeds sectors saw good growth in 2020, and with current commodity prices, substantial revenues will continue in 2021.  
There are some specific challenges in the livestock sector, with plant closures impacting cattle and hog prices in western Canada and the returns. However, COVID becomes less of an issue as the economies reopen, with no disruptions and remaining current in processing animals.  
There’s still reasonably solid or good demand for beef and pork domestically and in the international market.  
“I think those are all going to be positive things that we see improvement on the industry.” 
Klemmer said the big questions would have to deal with the ever-rising input costs. 
“We are see rising input costs, whether it’s fertilizer prices coming in for the grain and oilseed sector and these high commodity prices for grains and oilseeds mean high feed costs for livestock producers.” 
So, there’s a bit of caution for farmers to consider.  
“I think we’re in a good spot right now to weather these challenges and, depending on which part of the industry you are; there are some reasons to be optimistic. But I think there’s going to be that cautiousness that we need to think about as we’re making future investments and the potential impact of higher interest rates on those investments as well.” 
Klemmer said Canadian agriculture continues to be agile and resilient. •
— By Harry Siemens