SASKATOON – A new program in Saskatchewan that guarantees a minimum price for hogs is attracting interest from Manitoba producers, says the co-ordinator of the program.
Manitoba Pork stopped its popular forward contracting program when the agency was stripped of its single-desk selling status by provincial agriculture minister Harry Enns at the beginning of the month.
Scott Gattey said the Saskatchewan program guarantees a minimum price but allows producers to receive higher prices if they move up between contracting and delivery.
After his presentation at the Saskatchewan Pork Symposium, Gattey spoke with a number of producers – including one from Alberta – who were interested in the program.
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Cut Knife, Sask. producer Simon Waters, who signed up for the program at the meeting, said he thinks it will help his 40-sow operation.
“You have to have something to guarantee, not even a huge profit, but something to cut the bottom end off of it,” Waters said.
Learn from history
Pork’s price plunge in the fourth quarter of 1994 badly damaged many producers’ operations, he said. It isn’t something he wants to risk again.
“We needed something, and this gives us an option to use,” he said. “It’s an opportunity we have to put in a floor price for ourselves. It’s a big thing.”
The program was set up by SPI with funding from the federal agriculture department. Gattey said the government wants to test the program to see if it could be extended to other provinces.
Financial security
“Ever since the demise of tripartite they have been very interested in having some form of price risk management … available to producers,” Gattey said.
Producers from outside Saskatchewan can use the program, but only if they have a Saskat-chewan producer number and deliver to a Saskatchewan point.
The program is different from the one that just ended in Manitoba. That gave producers the ability to contract at a set price in the future, but they were locked into that price when the hogs were delivered.
Because the Saskatchewan program allows farmers to capture any price gain, Gattey said its premiums will be higher than those in Manitoba.
Producers can contract for prices up to six months away. Contracts are made for 4,000-kilogram units, a size that Gattey said allowed small producers to use it. The contract is not transferable.
Farmers can decide what price they want to lock in. Premiums are set according to that price.
Gattey said the premium will be lower than if individual producers bought their own options.
“We wouldn’t have entered into this if we couldn’t provide it cheaper than taking it out at Chicago,” he said.
