MONCTON, N.B. – The new president of the Canadian Pork Council has no illusions about the crisis facing the industry he is leading.
He is living it.
Mayerthorpe, Alta., producer Jurgen Preugschas says that during the past two years, his debt has increased by half a million dollars and his accounts receivable are down $350,000.
“That’s $850,000 that I’m in the hole compared to two years ago,” he said in an interview during the Canadian Federation of Agriculture summer meeting in late July. “I, like other producers, am staying in business because I am running up my debt.”
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He also has taken advantage of Farm Credit Canada’s offer to producers of a temporary holiday on repaying the loan principal.
“What is happening in the industry now is brutal, devastating,” he said. “Times will get better, I know, but we have to survive to get there and it is tough.”
Preugschas told the CFA meeting the Canadian breeding herd is down to 2002 levels, in part because farmers have culled more than 118,000 sows to take advantage of federal money available through a cull program.
Still, most are hanging on by increasing debt. Many others are leaving.
“I think you will see many producers continuing to exit,” he said.
The financial crisis in the hog sector is the biggest issue he faces as the new CPC president, as it was for past-president Clare Schlegel from Ontario.
Preugschas said a priority will be convincing governments that the existing safety net programs are not adequate.
An example is the new AgriInvest program that is supposed to cover the first 15 percent of margin decline. Under the new Growing Forward set of programs, AgriInvest is supposed to allow the producer to contribute, receive matching money from governments and then withdraw when needed to cover the top tier of losses.
But because hog farmers have no margin after years of losses, they are not eligible to trigger payouts. He said that with production costs of $180 a pig and prices still depressed, producers are losing $40 to $50 for every animal they sell this year.
“It is unsustainable,” he said. “And that is a program that really is not available to us when we need it.”
And he is far from optimistic that governments will fix it.
“It’s disappointing and frustrating but governments don’t seem interested in this issue,” said Preugschas. “When ministers met in Quebec City (in July), we were disappointed by their lack of engagement. It’s like they think they have fixed the problem with programs, but it is not fixed.”
The sow cull program has reduced hog herds and helped some producers leave the industry but there still are gaps. The take-up shows the depth of the problem.
He noted that federal minister Gerry Ritz has said there will be no ad hoc money and that regulatory reform will help reduce industry costs.
“That’s fine but it is not a quick fix and we are in the crisis now,” said the 60-year-old producer who markets 20,000 pigs annually.
During the CFA meeting, he also took aim at Manitoba’s restriction on hog industry expansion.
The Manitoba government “is intentionally trying to destroy an industry,” he said.
