Hog farmers who sell their pigs through Manitoba Pork have inked a supply arrangement with J.M. Schneider Inc.
Other than to say the arrangement is flexible, details on the quantity of hogs the agency will sell the processor were not released for competitive reasons. But both parties stressed their strategic alliance has more to do with quality than quantity.
Perry Mohr, acting manager for Manitoba Pork’s marketing services, said the arrangement is not exclusive. The agency will continue to sell to other processors.
This is the first time the agency has signed such an agreement with a processor.
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Mohr said it’s important for producers to know they have access to a market that will pay a competitive price.
“As farmers get bigger and bigger … and different kinds of relationships are formed, I think producers want to know that if they produce the animal, they’ll have a place to sell it, and they’ll have a place to sell it for a competitive price,” he said.
Manitoba Pork has always had a good working relationship with Schneider, he said, and producers see the company as being “a step ahead” of other processors.
“We have found that Schneiders has a very distinct willingness to work with producers on quality issues and quality assurance issues,” he said.
For several years, Schneider has paid up to $6 more per hog to producers who meet certain weight and leanness specifications. This fixed premium means even more to producers when hog prices are low, said Mohr.
“As hog prices go down, producers are looking for additional income, an edge if you may.”
Agreement made
Mohr said Schneider has agreed to be competitive in pricing in the North American market.
The agreement also addresses issues like price discovery, efficient marketing services, market development, risk management and information exchange.
The general manager of Schneider said the alliance “formalizes” the relationship the company has had with Manitoba Pork since the agency lost its single-desk selling powers.
Bill McLean said the agreement adds some “moral suasion” to the relationship on both sides. He said the processor will continue to sign contracts with producers, tell them its specifications, and give them feedback on how well they’ve met the requirements.
But he said the company will be improving its communication with producers to make sure they’re growing the pork that international customers want.
In the past, customers would come to the Winnipeg plant to explain their specifications. Now, because of food safety concerns, they want to know more about the plant’s suppliers.
“Really, our customers are applying a fair bit of pressure to us, saying, ‘Where do you get your pigs?'” he said.
Schneider and Manitoba have left the agreement open-ended, said McLean, to make sure both parties get what they need from the deal.
