The Alberta government has rejected a proposal from the province’s hog
marketing agency to loan producers’ money in lean times that would be
paid back when prices are higher.
“We’ve basically been turned down flat,” said Mack Rennie, general
manager of the Western Hog Exchange, the marketing arm of Alberta Pork.
The estimated $30 million Producer Ledger Program would have
established a floor price for hogs. The program would kick in to help
offset the cost of feed when prices dropped below a set level.
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Producers would begin to pay the money back when hog prices rose above
that level.
“We’ve got a drought here,” Rennie said. “What we’re saying is help us
through it. Don’t give us the money. Loan it to us, and we’ll pay you
back.”
But to Alberta Agriculture the program smells like a direct commodity
assistance program, which the government moved away from years ago.
“Right from the outset we indicated there are some policy issues
associated with getting involved in this type of program,” said Ken
Moholitny, assistant deputy agriculture minister. “For a number of
years we’ve been out of the commodity specific support game.”
He said many countries would see the loan program as a government
subsidy and seize the opportunity to challenge Alberta’s hog exports as
unduly subsidized.
The logic is hard to accept for hog farmers facing some of the highest
feed costs in years and some of the lowest prices for finished hogs.
In 1998, when farmers faced similar low prices, the cost of finishing a
pig was about $65. Now it costs more than $100.
Hog prices have been on a roller-coaster for the past two months,
starting at $1.50 per kilogram, dropping to 70 cents within weeks, back
up to $1.20 and now settling under $1.
Rennie said high feed prices and low hog prices are combining to make
income comparable to 1998 when hundreds of hog producers were forced
out of business because of low prices.
The weak prices of September and October were mainly caused by a
massive sell off of North American sows by producers fearful of even
lower prices during the winter if the fed pig supply surpassed
slaughter capacity.
Because of the sow sell off, forecasters predict that by the second
quarter of next year hog prices will be strong again. However, many
farmers have started to question their ability or willingness to hang
on that long.
“The question is, can you get from A to B? We’ve got a canyon to cross
and the bridge is burning. Can we get across the canyon to get to
there?”
Rennie points to a successful 1998 Saskatchewan loan program, which may
be revived, as a way to help hog farmers through the crisis.
The Saskatchewan program offered loans through financial institutions
of up to $40 per market hog and $10 per weanling. It distributed $11.4
million to 221 producers. All but a few thousand dollars were repaid
when hog prices strengthened.
Rennie said the proposed Alberta program would have a similar effect of
keeping hog producers in business.
“It’s like going to Dad for a little money to help you through.”
Moholitny said the Alberta hog industry approached the provincial
government with a similar program in 1998.
The government suggested a producer stabilization program, which was
not subsidized by government, but would have the same effect to help
smooth price peaks and valleys.
The program was never established.
“Unfortunately, once recovery started from 1998, you start making
money, you lose interest in risk management tools necessary to deal
with market downturns,” he said.
Moholitny said there has been a long list of requests for government
aid, including feed freight assistance, hay and straw support programs
and help for snowed under crops.
“It’s very difficult for us with limited resources, which one do you
pick?” he said.
“The dilemma is there is just not enough money to go around.”
