Hog producers operate their farms independently from one another, but work together through their provincial hog marketing organizations to bring about orderly and effective marketing of their hogs. With few exceptions, these agencies are responsible for the sale of market hogs in their province and are under the exclusive and direct control of hog producers, but do not regulate supply.
One of the main systems employed in selling market hogs is an electronic auction which in reality is a price discovery system with prices bid for hog lots. Based on supply and demand, it is fast, efficient, unbiased and competitive and a lot of hogs (about 200) can be sold in approximately 30 seconds. In some provinces, variations of selling include formula pricing, sealed bids, direct buy orders and are based on major market pricing. Producers receive their payment through their marketing organization on a dressed carcass weight basis.
The principal driving force towards leaner hogs in Canada has been the carcass classification and settlement system which, since 1968, has provided a national standard set of weight and leanness categories. In place for many years, the system is mandatory and is carried out on location at each packing establishment. The system classifies carcasses into indexes based on back fat measurement on the split carcass and on warm carcass weight including head, kidney, leaf lard and feet. The purpose of the system is to measure the carcass meat yield content. As such, the index is the basis by which the base average price derived through the market is adjusted to provide settlement to producers for the relative value of each carcass. The system is deemed to be fair, impartial and totally objective and encourages production of higher quality pork.
In 1986, Canada became one of the first countries to implement a national hog carcass classification system, employing electronic grading probe technology which values carcasses on the basis of objective measurements of both fat and muscle content. The electronic probe resulted in improved accuracy of grading and reduced variability of hog carcass.
More recently, there has been a reduction in the number of yield and weight classes in the national index grid, while focusing on leanness and core weight hogs of 75 to 90 kg. This provides incentives to producers to market hogs that fall in that core area, in line with consumer's demand for leaner pork. Traditionally, our hog carcass index system has been designed to reduce variability on pork quality and to provide to producers a consistent, quantitative signal regarding characteristics preferred in the changing marketplace. Although totally objective, it is influenced by domestic market needs and export customers' demands. As the variety of customer needs has increased, variations of the national grid within provinces and for plants have been introduced.