There is nothing fair about farming, especially about the share.
Over the past few weeks, Winnipeg reporter Ed White has been reviewing the post-Canadian Wheat Board era, and I’m looking forward to reading what he found, not because there is anything that can or should be done about it but as a learning experience.
Commodity prices are not tied to the cost of production, with the exception of Canadian dairy and feathers.
The primary producer has always been a price taker. All costs trickle down. Co-ops and other farmer organizations, such as the Family Farms Group, do some pooling of resources to help leverage opportunities with volume, quality and the pooling of production that meets select or premium market needs, including new data packages related to operational history, and in purchasing.
Hog prices are a good example of fair shares. Packers and processors are entitled to their portions, and over time these businesses have been adding value to their meat products with prepared and semi-prepared food.
Retailers have been investing in convenience packaging.
Weaning rates, feed efficiency and labour cost reductions are how producers create margins.
We have seen a big piece of the gains clawed back since the near doubling of pig prices from the 2009 lows to the 2014 highs, with some relief in the past season.
Looking at pigs in Canada and the United States, because these are tied at the shoulder, one could suggest that despite changes in the business over time, farmers are not likely seeing as much of the pig on their plates as they might.
The Americans keep great public records about such things. Currently, their farmers are receiving record low money from each pig consumed, about 20 cents, down from 40 in the early 1990s.
A shortage of pigs due to porcine epidemic diarrhea in 2014 pushed prices up for consumers, and retailers kept these up despite falling wholesale costs. Packers were the winners in 2016, but could 2017 be better for producers’ shares, considering that the meat-case price has finally tumbled and consumers are snatching up the other white meat while packer margins remain falling?
More North American packing capacity is coming online this year and next, while at the same time retailers are taking a smaller cut, which could bode well for producers’ piece of the pig.