Alberta’s hog producers are squealing in pain over the $78 million they’ve lost since last July.
A new report confirms what
Alberta pork producers have known for months – they’re losing money with every hog they sell.
Each week Alberta pork producers lose an average $2.16 million. Put another way, pork producers lose an average $41.65 for every animal they sell.
Alberta’s 1,800 hog producers sell 3.1 million hogs each year.
“We felt this crisis was a pretty well kept secret,” said Jack Moerman, vice-chair of Alberta Pork.
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It commissioned an analysis of the industry between July 15, 2002, and March 17, 2003, from Toma and Bouma Management Consultants, to highlight the difficulties Alberta pork producers were facing.
“We felt if it was public knowledge we would have a better chance to impress upon government that existing programs weren’t adequate,” said Moerman.
Perry Mohr, chief executive officer of the Manitoba Pork Marketing Co-op, said Manitoba producers are a little better off than their Alberta counterparts, but not much.
He estimates producers are losing $20-$25 a hog, or about $1 million a week.
Mohr said the single biggest difference between Manitoba and Alberta is that Manitoba producers have more available feed and don’t need to pay the freight bill.
Don Hrapchuk, general manager of Saskatchewan’s SPI Marketing Group, said the same thing.
He estimated Saskatchewan producers are losing $25 a hog, or $1 million on the 40,000 hogs sold each week.
Hrapchuk believes feed prices are slightly better in Saskatchewan because the drought wasn’t as widespread as in Alberta. He also pointed to the Saskatchewan government’s short-term loan program that gives money to farmers in hard times and deducts it from their cheques during good times.
Alberta hog producers have access to the Farm Income Disaster Program, but because pork prices hit rock bottom in the 1998-99 seasons, the average prices over the past five years are too low to trigger an adequate payout from the support program.
“We hope the government will make an ad hoc disaster payment of some sort,” said Moerman. He knows 20 producers who have decided to cut their losses and quit the business.
Few producers can suffer sustained losses. Even the much publicized disaster in the hog industry in 1998 and 1999 is not as bad as the present low prices when combined with high feed costs, he said.
Four years ago, the Alberta industry lost $65 million over nine months.
Three years of drought have dramatically increased feed costs in 2003. During five of the 36 weeks in the analysis, returns per hog were not enough to cover feed costs. During the rest of the time, producers may have covered their feed but not other costs like labour or utilities.
While few pork producers across the Prairies are having an easy time, Alberta producers are in a disaster class of their own, said Moerman.
Alberta has the highest feed cost in North America and pork producers from other provinces have access to better support programs.
Alberta does have disaster loan assistance programs, but Moerman questions the value of taking on more debt.
“We need more loans like we need a hole in the head.”
He said Alberta Pork officials have scheduled a series of meetings with provincial agriculture officials over the next few weeks.
The first choice for producers is some form of government ad hoc payment, next is changes to the disaster aid program to allow them to take the best three of the last seven years of income and the third would be an assistance programs like Saskatchewan’s where there is less rigorous equity required.
“The best scenario is a one-time ad hoc payment to help the drought-induced crisis,” he said.
If high prices continue, it will affect feed companies and packing plants like Olymel in Red Deer, he said.
