RED DEER – Alberta hog farmers are searching for ways to weather low
market prices and high feed costs that have caused losses of $35
million since July 1.
“Prices are not as low as 1998 but feed is up twice as much. That is
what is really hurting people,” said Bert Dening, a pork specialist
with Alberta Agriculture.
Alberta Pork is working on strategies to bring some stability back to
the market. It can’t control markets but leaders of the group have met
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with agricultural lenders and the province to discuss this year’s
losses.
Banks are reluctant to lend more money to the hog industry.
“We encouraged them to take it easy on producers and work with them as
much as possible,” said Alberta Pork chair Bill Wildeboer at a producer
meeting in Red Deer Nov. 13.
“It is important for producers to keep the bankers up to date as to
what their situation is,” he said. If the cash crunch continues,
lenders need to know individuals’ financial situations rather than wait
until bankruptcy is imminent.
The pork group, along with other livestock groups dependent on feed
grains, approached the province for a feed freight assistance program.
The province turned down the request.
The drought-shortened feed situation is placing a burden on an already
reeling industry. The greatest losses were experienced in mid-September
when producers lost $85 per market hog.
“The effect of that will be felt at least until the crop of 2003 is in
the bin,” said Wildeboer.
Feed barley is up to $4 per bushel, driving up feed costs to about $100
per pig. This has prompted more producers to import American corn,
which is selling for $180-$200 per tonne.
Feed wheat is available but the quality is below average in some cases,
said Dening.
Utility bills have doubled in the last couple of years to $6-$8 per
pig. While natural gas is relatively stable, electricity costs
fluctuate.
An alliance among intensive livestock groups allowed producers to buy
bulk electricity through a privately owned utility company, IQ2 Power
Corp. based in Calgary. Electricity prices have been set for the next
three years, providing some stability to users.
The company is the third largest electricity retailer in the province,
dealing mainly with industrial and commercial groups.
Another weapon against price volatility is the trend toward contracts
and alliances rather than accepting the cash price.
It is estimated 80 percent of the hogs sold on the Canadian Prairies
are under a contract or other alliance, said Kevin Grier, an analyst
with the George Morris Centre.
In addition, more value-added products have gone into stores and
improved exports have helped keep prices from plunging lower, he told
producers.
“The reason why prices are not as low now as they were in 1998 is
because demand for pork is better,” he said.
“There was so much pork on the market it got retailers to feature pork
more, it got consumers to buy more, so there was a silver lining.”
Grier suggested 2003 prices could be $1.30-$1.55 per kilogram.
These market vagaries have forced many producers out of the business in
the last three decades. Alberta Agriculture reported 9,900 pig farms in
1981. By 1991, there were 6,200 and by 2000, 2,350 remained.
In 2002, there are fewer than 2,000 farms but they produce more pigs
than were produced in 1981.
