WINNIPEG – In an open market, farmers are better off when they stick together, says an American hog marketer and industry analyst.
Larry Sills told Manitoba Pork delegates that alliances will keep their operations healthy after new open market rules replace the hog-selling agency’s provincial monopoly on July 1.
Sills works for the National Farmers Organization in Ames, Iowa, a group of independent farmers that hires professionals to market its hogs.
“You are better represented in the marketplace by professional people who understand the market totally,” Sills said. “I preach that every day. I believe you can do more together in a ‘we concept’ than you ever can in an ‘I concept.’ “
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A key strategy in an open market is leverage with processors. Farmers need quality, volume, consistency and timely delivery – all possible when farmers work together, Sills said.
He advised farmers to determine their break-even price, develop a marketing plan, then stick to the plan. Too often, farmers decide to hold off selling in a rising market, even though they can get profitable prices.
Producers get themselves in trouble when they try to play the market, Sills said.
He recommended farmers find a secure way to make money, such as forward pricing or other futures markets tools. Sills stressed that farmers who rely on the cash market for good prices rarely are successful.
He said Iowa farmers could make on average $16.86 U.S. per hog in the late 1980s. Since then, large operations have moved in and scooped up profits. For the past five years, farmers average $2.40 per head.
Sills said he thinks Manitoba Pork provides the variety of forward contracting options farmers need to consistently make money.
“For the life of me, I do not understand why your minister of agriculture would come in and tear down a system that is functioning like this thing is functioning,” Sills told reporters.
