LONGUEUIL, Que. – Gilbert Lavoie shakes his head over the trend in hog marketing from the Prairies.
As the marketing development adviser for Quebec’s 4,300 hog farmers, he has seen them make hard choices about the industry’s future. And it is different than where prairie pork is headed.
Quebec produces about a third of all Canadian hogs. Its expected 1997 production of 5.7 million is more than the four western provinces combined.
Despite those numbers, the Quebec industry decided to stick with a single-desk system – a sole agency with a sales monopoly on all hogs grown in the province – as the best way to give producers a fair price while serving the needs of packers, processors, exporters and consumers.
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In the West, single-desk marketing of pork has been under attack by larger producers seeking a freer market and by provincial governments hoping to attract or retain their packing plants. Last week Saskatchewan announced an end to its single-desk system by April 1998 and both Alberta and Manitoba have dismantled their single-desk systems.
Lavoie describes Quebec’s position as vertical co-ordination, not vertical integration, denigrating the latter as “just raising hogs, not managing them.” He said “probably our French culture here” has led to acceptance of the co-ordinated approach.
“We are influenced by what’s going on in France as well as the U.S. The French are very efficient, producing the most piglets per litter in the world. They work in a network of small producers, so they get the advantages of being big – research, marketing, technology – while staying small. The French are more socialist and work together. In Quebec, producers rally to support each other.”
Close to processor
Quebec does have some unique factors. The average pork producer has 2,000 sows and about 90 percent of all Quebec hogs are within 50 kilometres of one of the province’s 10 abattoirs. The seven packing companies that run them sit down three or four times a year with representatives from the farmers, feed mills, processors and government to discuss how to jointly improve the profitability of their industry.
And Quebec has worked out a sales system that provides price comfort to farmers and supply security to packers. Lavoie flips through some charts in the federation’s office and shows that before 1989, under a free market, the Quebec price averaged $10 less than the American Midwest per 100 kilograms of carcass weight. Since that time, using the federation’s electronic auction system with guaranteed supplies to packers and a weekly pooled price, the producers are getting an average of $4 more per 100 kg than the U.S. Midwest price.
“The way to go now is to live or die as a whole industry,” said Lavoie.
The federation’s auction system starts with a phone call from a pork producer saying he’d like to deliver a certain number of hogs to a specific abattoir.
The auction sells to the packers at 10 a.m. each weekday and matches farmers’ offers to deliver with the plants, using a formula that guarantees each packer 72 percent of its historical market share based on a rolling average. The remaining 28 percent of hogs offered are sold to the highest bidding packer. The farmers truck their hogs to the plant directly and receive the weekly pooled price based on what their hogs grade.
Lavoie said negotiations are on now with the packers to reduce the 72 percent allotment so aggressive packers can buy more supply.
He said all packers except one like the system. The dissident is taking the Federation des Producteurs de Porcs du Quebec to the province’s Supreme Court after losing in a lower court case in an attempt to have more direct access to farmers.
