Gestation stalls done? Seems like it

It seems to me like you might as well stick a fork in its butt and turn it over: the gestation stall debate is done.

Yesterday the Retail Council of Canada announced that all of Canada’s major food retailers want their pork to come from gestation stall-free farms by 2022. This includes Costco, Safeway, Loblaws – which owns Superstore, Federated Co-ops, Metro, Sobeys, Walmart and Atlantic Co-ops.

The council uses some weasely-seeming words in its pronouncement, giving it room to wiggle free perhaps if there isn’t enough pork available to its members (at cheap prices), by 2022. But it’s clear that its members want to buy from farmers and packers that provide stall-free pork, and that means that anyone that doesn’t supply it could be shut out.

It’s been pretty obvious that this trend of phasing out sow stalls was not going to end or stop, and this is just more proof of that. The retailer element is crucial, because they’re the ones who are the most important market. Regardless of how consumers feel, and even if half the consumers out there will never care where the pork comes from, if the grocery chains refuse to carry stall-raised stuff, farmers who produce it will be selling to residual markets, if anywhere.

There’s already a big move on among the smartest producers to move into open housing for gestating sows. Lots of packer-owned operations have already converted, and it’s pretty obvious that none of them would build a new stall barn.

Although not many new barns have been built on the prairies in recent years, the ones going in – from what I have been told – all use open housing. That makes sense. Why would anyone put millions of dollars into a stall barn and then be faced with market or regulatory requirements to convert a few years later? Only an idiot would do that.

Much of the prairie and Canadian hog industry has been progressive about this issue. A couple of years ago the Manitoba industry (seemed to) embrace a goal of ending sow stalls in Manitoba by 2025. And the Canadian Pork Council, while much more reluctant on the issue, seemed to be defensively moving towards a sort-of acceptance that gestation crates were probably going to go away.

As long as the deadlines are long enough away, such as 2022 or 2025, farmers shouldn’t face too much hardship from the change. Converting an existing barn is extremely expensive, but if open housing is installed when new barns are built to replace worn-out old barns, then there is no additional cost. It’s a free conversion if done when building a new barn. By 2022 most of the present barns will need replacing anyway, so these deadlines aren’t much of an impediment, unless we get another few years of losses. (In that case most barns would be closed anyway because the farmers would be bankrupt.)

I was surprised and a bit confused a couple of weeks ago at the Manitoba Pork Council annual meeting when council chair Karl Kynoch seemed to be trying to move away from the council’s apparent commitment to making Manitoba voluntarily stall-free by 2025. He claimed, in talking to reporters, that the council had only actually committed to thinking about it and checking out the possibilities and alternatives. This was odd to me, because I was at the announcement of the policy pledge and spoke to a number of producers then and subsequently about the issue, and I’ve always heard them say that no one would ever likely build another stall barn in Manitoba.

Perhaps some of the more vociferous defenders of stalls have browbeaten some MPC representatives into wriggling back a ways from its commitment, or maybe farmers are in such terrible financial shape they are in no mood to consider anything today. Either way, it leaves a confusing and possibly dangerous situation behind: is the hog industry actually going to voluntarily phase out sow stalls?

A defiant attitude was encouraged at the MPC meeting a couple of weeks ago by an American anti-activist activist, a lawyer who fights back against critics of the industry. He said farmers should “hold fast” to whatever production system they felt was OK, including sow stalls, and that there was no way the industry could be forced to convert – unless the grocery chains clearly declared they would refuse to buy stall-produced pork. He said that so far, in the U.S., Walmart and the most major chains have not made that declaration, and he didn’t think they ever would.

Well, it hasn’t taken long for Canada’s retailers to make their desires known. It’s pretty clear they want stall-free pork, even if they leave themselves wiggle room in case total conversion is not possible by 2022. Those retailers are the market. And wiggle room or not, if the big corporate producer-packers like Smithfield and Maple Leaf Foods convert, you can bet they’ll do whatever they can to keep those retailers happy. And if nine years from now it means telling a few recalcitrant producers that their pigs are no longer welcome at the plant, then that’s what they’ll say.

So, to me anyway, this issue looks done. Sow stalls are going to be phased-out one way or another. If farmers are progressive and voluntarily phase out as they replace old barns, it shouldn’t hurt the industry. If they decide to play chicken with the issue, just watch for government mandates and regulations to start coming down.

When even Walmart and Costco sign-on to something like this, farmers had better take it seriously.

About the author

Ed White — Ed White has specialized in markets coverage since 2001 and has achieved the Derivatives Market Specialist (DMS) designation with the Canadian Securities Institute.

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