Larry Martin last week pointed to what could become an Achilles heel in Western Canada’s hog industry.
Martin, chief executive officer of the George Morris Centre in Guelph, Ont., said the Prairies boast the advantage of low-cost production and increasingly efficient processors.
But the head of the agri-food think-tank said Western Canada lags behind some of its main foreign competitors in one crucial area.
The relationship between producers, processors and food retailers is inefficient, he said, referring to the time and money spent co-ordinating the movement of hogs through that chain.
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Martin said he would prefer a system where the final value of a hog is shared among producers, processors and retailers according to how much they contribute to that value. He does not know what mechanism could bring that about, although he thinks contract production could be a part of it.
“We will never find that kind of solution if we don’t look for it,” he said during a presentation at the annual Hog and Sheep Days last week in Brandon.
“My biggest frustration is that I don’t see anybody looking for it.”
The current system in Canada can foster tension between the different players in the hog industry. The collapse of hog prices last year stirred some resentment among hog producers as they watched processors and retailers continue to make money from pork.
Martin noted that Denmark remains a contender in the global hog market despite having production costs well above those of Western Canada.
He dismissed subsidies as being the main reason for Denmark’s success, pointing instead to the hog industry’s structure there.
The country has an integrated system where farmer co-operatives guide the supply chain from farmgate through to finished product.
That allows them to react more quickly to market changes, Martin said.
In the United States, vertical integration has swept through the hog industry from the opposite direction. Companies such as Smithfield have invested in hog barns to better assure supplies for their processing plants.
Martin also spoke on the importance of free trade and the need to keep markets open in Asia.
On a more local front, he advised the hog industry in Western Canada to become more aggressive with its product development. The industry is not as good as poultry and fish in catering to the needs of consumers who are spending more time in restaurants and less time preparing meals at home, he said.
He advised those present to consider what chicken nuggets did for the poultry industry. The nuggets got their first exposure through McDonald’s restaurants. They then began appearing on supermarket shelves.
