Even if single-desk power is stripped, prairie pig producers can stand up to packers.
But that is only true if producers have packers to pick from, strong marketing organizations and access to the American market, said industry leaders at two meetings in Saskatoon last week.
Representatives of Saskatchewan and Manitoba hog boards and two major producers discussed how hog producers can best structure their industry for massive growth and producer profitability.
Hog producers’ bargaining power “will be reduced unless they are part of a marketing group that commands a large volume of hogs,” said Larry Sedgwick, general manager of Manitoba Pork, formerly the single-desk seller of that province’s hogs.
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He said producers across the Prairies need to “wholeheartedly support their marketing agency in whatever form it evolves into to allow that agency … to be in a strong position in the marketplace.”
He said his province’s decision to break the hog marketing monopoly had weakened producer power, but luckily the hog market is good and the packers are chasing pigs.
“When the pigs start chasing the packers, that’s when producers will have to worry,” Sedgwick said.
He and Saskatchewan hog board manager Don Hrapchak predicted a major consolidation of slaughter facilities.
Hrapchak expects to see Fletcher’s, Maple Leaf and Quebec companies dominate the hog slaughter industry after the shakeout. That’s why it’s good to see Intercontinental Packers of Saskatoon not only surviving, but becoming stronger, he said.
“Having Intercon in the middle could keep the others somewhat in line,” said Hrapchak, who likes the marriage of Fred Mitchell’s company with the Tai Fang Group of Taiwan.
But Hrapchak said producers’ prices are now vulnerable to any packer changes because there are so few. If the Maple Leaf plant in Edmonton shuts down, that will throw 12,000 to 15,000 hogs on the market, which will drag down prices.
Humboldt, Sask. producer Florian Possberg said he isn’t worried about packer consolidation. He said he would respond to bad prairie prices by hauling hogs south of the border.
Sedgwick said many Manitoba hogs are still heading to the U.S., and more weanling barns are being built to produce live hog exports for American producers.
Outlook, Sask.-based Quadra Group representative Richard Wright said producers need to have an open market system that will let them grab opportunities. He said the American market now accepts hogs up to 120 kilograms, but Saskatchewan producers get discounted by the hog board for anything above 100 kg. He said tardiness in adapting to market demand is an example of why the single desk should be broken.
“Remove the handcuffs that prevent individual producers from developing strategic alliances with the packing industry,” said Wright.
