Second Look: A financial lesson to be learned from the hog crisis

Two key ratios that give a clue as to why the Canadian hog
industry has been hit harder than its U.S. counterpart

by LARRY MARTIN

The George Morris Centre has an intensive management program called CTEAM for Canadian farmers, which has some people who teach aspects of managerial accounting. One aspect is a different way to measure financial risk on farms.

One of my colleagues and I are using this approach in a forthcoming study for a number of financial institutions. The study provides some interesting insights about the Canadian hog industry as it went into the past two plus years, which I’d like to share in this article.

In my experience, many people define leverage as debt/equity (D/E) or debt/assets.

Better Pork - April 2010