Hog farmers want quality assurance premium

Producers meet with processors to discuss how they can be better rewarded for participating in traceability program

Canadian hog producers are on board with quality assurance programs to ensure the safety and value of pork, but before taking steps into a more detailed pig care and traceability program, they want per pig payments to reflect the extra effort that will be involved.

A meeting between Canadian pig producer organizations and pig processors is scheduled March 18. Compensation for producers who adopt the Canadian Pork Excellence (CPE) program is likely to be a primary point of discussion.

Pushback from producers was evident at a March 7 Alberta Pork meeting. Several farmers said there is no incentive to participate in CPE because pig prices are low and implementing further quality assurance programs adds to cost of production.

“Some of our producers looked at this and said this is kind of the last straw. This is our last time to really push hard on packers to sit down at the table and negotiate,” said Alberta Pork executive director Darcy Fitzgerald.

He said producers plan to continue with Canadian Quality Assurance CQA, which is a major selling point for pork both domestically and internationally.

But they don’t intend to embrace CPE “until we have a discussion about the value of what (pork processors) are getting for this program versus what we get, which is … nothing right now.”

Producers in Alberta and Quebec made their objections known in October. Alberta has since indicated that an additional $7 per pig would be needed if they embrace CPE. Saskatchewan producers say they want an additional $9 and in Quebec, which has a single desk marketing body, an arbitrator is involved in negotiations on a new formula intended to reflect extra money for CPE implementation.

“Now we have all these numbers,” said Fitzgerald. “Where it will settle out I’m not sure, but that’s what’s being negotiated now. What is the value of that pig by doing these programs? And it does have value. We’ve had experts come in and say there is value there in producing these programs, because other people don’t have them.”

Alberta Pork vice-chair Martin Waldner said Canadian producers are losing an estimated $20 to $30 per hog now due to low market prices, but some Canadian packers have more sales than product.

About 70 percent of all Canadian pork is exported and international customers put value on the quality assurance of the product. Waldner said Canadian pork is in high demand in Japan, for example, and “that tells us that the verified Canadian pork, that brand has value.”

However, he added there is no mechanism or tool that drives that value back to the producer.

“If packers are completely unwilling to provide additional compensation, we will not proceed with CPE delivery as outlined,” Waldner said.

“Packers are aware that we’re unsatisfied with the current model, but they also have their own business to look after. We hope that this matter can be resolved in a mutually beneficial way. Otherwise we may have to explore other options.”

Fitzgerald said the future of the industry will depend on the ability of producers and packers to negotiate.

“We don’t give ourselves enough credit for the great values that we can find if we sit together and really look at how we’re going to grow this industry, how we’re going to make it more prosperous and how are both sides, the producer and the packer, going to survive into the future, and that’s by working together,” he said.

The CQA program for pork was first developed to show that Canadian farmers were committed to production of safe pork. At its launch, producers were paid a premium for participation but when more than 50 percent of producers participated, the premiums stopped, according to Fitzgerald.

The CPE program, which the Canadian Pork Council expected to launch this year, has all the elements of CQA plus a traceability component called PigTrace and an animal care assessment component called PigCare.

It is intended to be a national program under which packers and brokers can sell Canadian pork under the same quality assurance label. However, costs of implementing the CPE may be a bridge too far for some producers.

“Producers are losing support for the program altogether,” Waldner said. “We recognize the need to update our quality assurance standards and we recognize the value this brings to the industry overall, but these are big picture considerations.”

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