LETHBRIDGE – Alberta pork producers lost $1.65 million in equity in the first week of November.
“Everybody knows it is a tough year so far, and we don’t have long to go before we get a recovery going,” said Alberta Pork chair Jim Haggins.
A recent Alberta Pork telephone survey found losses of $35.20 per hog this year.
Cost of production in Alberta is $1.45 per kilogram dressed, while prices for the first week of November were $1.18 to $1.82 per kg based on processor prices in the province.
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“We can’t handle that,” Haggins told Alberta Pork’s Nov. 12 zone meeting in Lethbridge.
The news set a somber tone for farmers at the meeting, whose equity losses now total nearly $60 million for the last 22 months.
Haggins said a new pricing formula is needed that offers a made in Canada price rather than relying on U.S. Midwest cash prices.
He said only 15 percent of American hogs are sold on the cash market, which means it is a poor reflection of what farmers should be paid.
“I don’t know how, but we have got to figure out a way. We can’t rely on the dollar to save our butt. We’ve got to find a way where maybe we stay with U.S. Midwest pricing but we change the formula so the producer can get a better share.”
Haggins’ information indicates American producers are also losing $20 per pig shipped to slaughter.
However, he said in an interview that a return to marketing boards would not help.
“Whether it is single desk selling or multiple sellers, I don’t think it makes a difference. The bottom line is whatever is offered to producers is a fair market price and so the packers can survive and prosper. It is not going to be easy.”
He said recent research has found that Alberta producers lose 10 to 15 percent under the current pricing formula.
According to international researcher Genesus Global Markets:
• Canadian producers are paid an average of 41.9 cents a pound
• U.S. producers receive 43.4 cents
• Mexicans get 81.7 cents
• Brazilians make 77.2 cents
“Canadian producers receive the lowest price for pork in the world,” Haggins said.
“Alberta producers have the lowest price across Canada. Therefore, we have the unique credit of having the lowest price pork in the world coming out of Alberta.”
Olymel spokesperson Don Brookbank told the meeting that the company is hoping for a better 2011 but in the meantime he realizes producers are in trouble.
“We know that producers are on the edge,” he said.
“We don’t want to see any more pigs lost. At the same time, we compete with that U.S. juggernaut to the south of us. They produce 2.3 million pigs a week and we have to compete with them in the world.”
Olymel’s Red Deer plant exports 60 percent of its weekly production of 45,000 hogs. It faces higher labour costs and employee benefits than the United States, and the export price of pork goes up when the dollar is on par.
“We prefer a weaker dollar because it is better for us on the sales side,” he said.
Many producers have already decided they cannot wait for prosperity to return. The Alberta industry has shrunk to fewer than 380 producers this year from 1,300 in 2003.
Haggins said more have shut down in the last five weeks. He said the federal program that provided money to producers for leaving the business has ended so there is no money available through the hog transition program and little help is available through the AgriStability program because producers have not had much profit in recent years.
About $33 million will go to hog producers in 2009 AgriStability payments, said Ed van Dellen of the Alberta Financial Services Corp. in Lethbridge. More than 220 producers were enrolled and 100 files worth $15 million in payments have been completed.
Van Dellen encouraged producers to submit their claims as soon as possible. Interim applications are available for 2010 production and a final application can be submitted later.
However, many producers are concerned money won’t be available because they have not turned a profit in several years, he said.
“It is margin based and if you start depleting your margins, the program isn’t going to do anything for you.”
