MINNEDOSA, Man. – Manitoba’s move to sell hogs on the open market has taken money out of producers’ pockets, say some hog farmers.
Eight months after the new system kicked in, some pork producers say they’re paying the price while meat packers reap the benefits.
“This is not better for anybody besides the people buying our hogs,” Stan Yaskiw, a Birtle, Man. producer, said at a Manitoba Pork meeting here March 13.
Manitoba Pork once held a monopoly on pork sales in the province. It said last week the shift to an open market is costing producers close to $5 per 100 kilogram hog.
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“We feel we can attribute a large part if not all of that to the fact we do not have as good a negotiating position as we have been in the past under single desk selling,” said RenŽ Chabidon, assistant manager of Manitoba Pork which now handles 80 percent of the province’s hogs.
“If they succeed in pitting producer against producer that $5 premium over the pool price is not going to amount to a heck of a lot,” Yaskiw added.
The difference between Manitoba Pork’s price and the Omaha average price in the United States widened by $4.33 per ckg in 1996, Chabidon told the meeting.
“It makes negotiating and setting that base price difficult if there’s the perception that the packer has an alternative.
Yaskiw said he believes the packers want to lure some of the province’s largest-scale producers to sell hogs directly to the packers, bypassing Manitoba Pork.
“I know I’ve heard of some pretty lucrative deals being thrown at guys to go direct.”
Chabidon said packers are offering producers the same pooled price Manitoba Pork pays minus the agency’s levy deduction used to cover services such as marketing and environmental programs.
“We saw this coming a year ago,” said Gary Tolten, a director for the Minnedosa district.
“If one person’s getting a premium, someone else is getting a lower price.”
The agency should present the findings to the provincial government, Yaskiw said.
“If we allow the spread to widen between here and the U.S., and if there is not the competition here, the industry is going to leave Manitoba.”
Bill McLean has the same fears.
But the general manager of J.M. Schneider said producers have to face the realities of an open market system and partner with packers to produce high quality pork for a fair price.
“When someone says we need to protect you from the big bad packer, that’s just not fair,” McLean said from his Winnipeg office.
“If we’re not working together as an industry in Manitoba the ones that will eat us up are directly south of the border.”
Schneiders pays producers who market their hogs directly to the company the same price it pays Manitoba Pork. The open market gives farmers more choice, he said, but it also means they have to know what the customer wants and be responsive to market demands.
“Under the old single-desk system the board could manoeuvre us into a position whether the market warranted it or not,” he said. “And the board was the one who insisted we negotiate separately.”
McLean said Schneiders is not paying less for hogs compared to the U.S.
“We need to know at Schneiders the producer realizes I’m paying a fair price based on the market not what they perceive to be fair.”
Farmers’ fears that packers are pitting producers against each other is unfounded, he said.
“Right now there is a surplus of pigs but there could soon be too few hogs in Manitoba,” he said.
“We need to take ourselves out of this mud puddle we’re in today and look at the great potential this industry has in Manitoba.”
