WINNIPEG – Single-desk selling of hogs may have disappeared on the Prairies, but that doesn’t mean producers can’t band together to gain market power, says the head of the Canadian Pork Council.
As the packing industry becomes more concentrated and producers in the three prairie provinces face the prospect of dealing with one major buyer, some collective action may be in order, says Martin Rice.
“I think western hog marketing organizations … will have to work more together, maybe looking at a prairie or Western Canadian hog-selling organization,” he told a market conference last week.
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In an interview later, Rice said it would probably be easier for producers in the three provinces to work together now that they no longer have monopoly powers.
“If they did, there would maybe have been more competitive concerns,” he said. “Now that they are voluntary organizations, it probably frees them up to look at these kind of things.”
He added the pork council isn’t advocating the idea, nor is it the official position of any of the provincial hog-selling agencies.
“But it’s something you hear talk about,” he said, adding he expects it will be discussed during the upcoming round of annual meetings of the provincial hog boards.
Following his speech to the Grain World conference, Rice was asked if the pork council is doing anything to try to help producers get better access to price information in the post single-desk selling world.
Fred Tait, a producer from Manitoba, said the United States experience suggests all producers are not created equal when it comes to getting paid for pigs in a vertically integrated system, in which packers control all aspects of production from piglet to plate.
“When vertical integration gets to about 50 percent of production, there’s a very wide differential in prices paid to the integrated operator and to the independent producer, sometimes up to 25 percent,” he said. “That makes the small producer vulnerable.”
Rice agreed that’s a problem, as packers negotiate confidential contracts with large hog operations that have different break-even prices than small independent farms. It’s something the Canadian industry is likely to see more of with the demise of single-desk selling and increased packer concentration, he said.
“And to the extent that we price off the U.S. open market, we’re pricing off something that’s getting smaller and smaller as a portion of the total,” he said, adding that U.S. producers have asked their federal department of agriculture to require packers to publish all prices.
