Hog industry leaders have warned MPs that without quick action to get money to producers, the industry will begin a meltdown.
High feed costs and a strong dollar mean producers are losing more than $50 on every hog sold, Canadian Pork Council directors Stephen Moffett and Curtiss Littlejohn told the House of Commons agriculture committee Nov. 26.
“A 500-sow operation is losing over $45,000 per month,” said the council’s statement.
“Trade credit is at the limit. Operating credit from financial institutions is no longer available in view of the situation. Equity is disappearing.”
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The same day, the council’s executive director, Martin Rice, flew to Toronto to meet Canadian Bankers’ Association officials.
“They were hitting the panic button,” he said in an interview.
On Parliament Hill, the industry told MPs it is requesting a government loan program to help most producers survive until profits return, although they conceded there are no early prospects of a turnaround.
“Without some form of interim financial support, the industry faces certain collapse,” said the council’s brief.
“Should this occur, the financial and social disruption will be profound. The industry’s ability to ever recover will surely be lost.”
The industry leaders said loans would give some producers time to plan their exit. Any producer unable to repay the loans when profitability improves or a time limit is reached would agree to leave the hog sector.
“It must be made clear that not all pork producers will successfully make the transition to be competitive operators over the long term,” said the pork council. Most will but “some producers will no longer be able to compete and will need to pursue alternatives.”
The Canadian Cattlemen’s Association appeared at the same committee meeting to argue for its own form of government aid to stave off widespread bankruptcy.
The cattle industry also is losing money, although not as much as the hog industry, because of the high dollar, higher feed costs and the impact of Canada’s decision to implement a tougher feed ingredient rule than the United States.
The cattle producers told MPs it is critical that the government find some way to get cash into the industry quickly.
It suggested an advance on program payments of up to $100 per cow and $150 for feeder cattle based on the Dec. 31, 2006, record of cattle inventory.
At the same meeting, senior officials from the packing industry completed the tale of livestock industry woe by telling MPs they are losing money because of higher costs brought on in part by the ban on specified risk material.
Hog and cattle industry representatives spent the past several weeks lobbying for government help.
Rice said so far they have found little government appetite to go beyond some tweaking of programs that already exist under the agricultural policy framework.
The industry appealed to MPs to take up their cause.
