RED DEER – A frustrated and frightened Alberta pork industry is searching for life preservers before more producers go under.
Participants at a March 15 meeting in Red Deer discussed the downward spiral the industry has experienced, which has left most producers devoid of profit for four years.
Earlier this year, representatives of Alberta Pork met with the provincial government to discuss a sustainability fund in which the organization offered to put its own money into a program to help get money to its 380 cash-strapped producers.
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The proposal was nixed because the money is collected through a producer checkoff and it cannot legally be used that way.
“The sustainability fund is now a memory,” said Alberta Pork chair Jim Haggins.
The organization also offered to lower its levy to 85 cents from $1 per animal sold.
Rather than go through a regulatory change to lower the checkoff, producers will receive a 15 cent rebate on a quarterly basis, said Alberta Pork manager Darcy Fitzgerald.
Starting in April, production economists are going to work with 30 farms on a trial basis to assess their cost of production and suggest changes. The information will be confidential.
The organization also asked government to support its traceability program because the beef, sheep and cervid industries have already received money.
Deputy agriculture minister John Knapp told the meeting he would take concerns back to minister Jack Hayden but he could offer no assurances of help. The province is running a significant budget deficit and he did not believe more money could be found for ad hoc aid programs.
That was not good enough for those present.
“Pork producers see how the Alberta government is working with other commodity groups. The government says if, and, or when. Producers are tired of hearing that,” said director John Middel of Rocky Mountain House.
“As pork producers we don’t see you are willing to support us in the same endeavours for traceability that we have seen in other commodities,” he said.
However, Knapp said government can only do so much.
“Government can support an industry but government can’t make an industry successful,” he said.
A major issue for the Alberta group is the hog pricing formula.
Alberta prices are based on an average cash price paid in the United States that takes into account the exchange rate and some other conversion factors. Iowa-southern Minnesota prices are used to determine prices in Western Canada.
This has not changed in 20 years and when the Canadian dollar was much weaker, it worked reasonably well, said Ron Gietz, Alberta Agriculture pork specialist.
However negotiated cash sales in the U.S. represent about three percent of the total market so everything is getting priced off fewer and fewer hogs.
Alberta Pork is still gathering information on how a new formula could be developed. Producers need to gain a better understanding of the dressing percentage and how it should be adjusted upward for Canadian hogs. The pricing formula also needs to change so they are not dependent on the exchange rate.
In 2010 the exchange rate was 97 cents so there was a $7 a pig difference between the Canadian and U.S. price. With a par dollar, there is a $12 disadvantage.
On March 30 the Western Hog Exchange is meeting with producers and exchange shareholders to discuss pricing formulas in Red Deer.
