N.M. Paterson & Sons Ltd. will make the jump into Manitoba’s hog business by joining with Manitoba Pork, the agency that once held a monopoly over selling the province’s pigs.
The Winnipeg grain company and Manitoba Pork announced Jan. 30 the creation of Dynamic Pork Corp., calling it the pro-vince’s first network contracting hog farming operation.
The new company lets farmers pick what level of risk and investment they’re comfortable with, said Manitoba Pork director Ken Foster. Producers also have the choice of producing pigs for a set fee without carrying any investment.
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It’s one way to give younger producers a chance to get into the business and grain farmers a good option for diversification, said Foster, an Arborg, Man., producer
“Each producer can decide which level of investment he’s comfortable with.”
“He might only want a contract to feed pigs, or may not want to get involved in the production side at all and be an investor at the top.”
The corporation will be set up like this: at the top sits Dynamic Pork Corp., owned 50-50 by Paterson Grain and Manitoba Pork. Under the corporation is the network of investors, which owns the livestock and contracts out for services and feed.
The three levels under the investment network include farrowing barns, finishing barns, veterinary services and feed mills, each of which will contract services on a fee-for-service basis.
Individual farmers will own the barns and may also be investors at the network level, but don’t have to be.
Profits will be paid to investors as dividends once the pigs are marketed.
“If the barn operator wants to share in the risk, he has the first right to buy shares in the network,” said Foster. Barn owners have the first crack at buying shares into the network, followed by Paterson, Manitoba Pork members outside the network and the general public.
Key to the operations are the “toll mills,” which will be owned, operated and supplied by Paterson to supply each network. Foster said they will be run on the same basis as the farrowing and finishing barns, where the cost of feed is based on a set rate over the cost of production.
The company wants to have its first network up and running by the end of this year. Foster didn’t say where that would be, but added mills will likely be joined to or very near existing Paterson elevators, and barns will be located within a 50 kilometers radius of the mill to keep transportation costs down.
Manitoba Pork will market all hogs produced through Dynamic Pork Corp.
Both partners will invest an initial $100,000 to get the company started. The rest will likely be financed, Foster said.
Feeder barns will average 1,300 hogs per barn, which should make the venture more attractive to local areas concerned about odor and environmental problems associated with “mega barns,” Foster said.
The decentralized network farms will be spread out over a large area to limit the impact on the environment, he added.
Network sizes will vary, but Manitoba Pork based its plans on a model to produce 37,000 hogs annually.
Chief executive officer Andrew Paterson said the network concept is good for everyone.
“Independent producers will see the benefits of large-scale production without incurring high risk, grain growers will have a diversification option, we can build on our established elevator network across Manitoba, farmers will get added value from their operations and local economies will benefit,” he said in a statement.
