Production woes | Value chain is broken, official tells Senate committee
The hog industry value chain is broken, producers can’t make a living and reduced government safety nets are of little help, prairie hog industry leaders said last week.
“I think we in the industry can all agree the value chain is broken,” Alberta Pork executive director Darcy Fitzgerald told the Senate agriculture committee.
“Someone makes a lot of money and there are people who make no money and are going in the hole and leaving the industry. Somehow in that system we have to figure out the price that should be paid to a producer.”
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He said producers are losing $30 to $35 per market hog.
Andrew Dickson, general manager of Manitoba Pork, told the committee that the industry is not making enough money to make ends meet.
“The problem we have is cash,” he said.
“We do not have enough money for the guys to buy their feed, buy their pigs and pay their staff. They are running out of cash.”
He said changes to farm safety nets that took effect April 1 with the launch of Growing Forward 2 make it worse.
Dickson said the Manitoba hog industry told officials during Growing Forward 2 consultations that AgriStability should not be cut. Instead, federal and provincial agriculture ministers agreed the trigger for payments should be a 30 percent decline in income instead of the previous 15 percent.
“It is probably very good for the cereal industry and everyone else, but it is a broad sweep of change for a program that we needed,” he said.
“What will we do now? We do not have that safety net in place.”
Fitzgerald told senators that the Alberta hog sector had shrunk during the past dozen years from 1,200 producers to 300.
And it is not because those producers were not efficient.
“The problem is that western Canadian producers are paid the lowest pretty much in the world, but yet still are some of the most globally competitive,” he said.
“There is a problem within the system.”
He said too many corporate links in the chain undervalue pork, including retailers who use it as a meat loss leader.
Meanwhile, imports from the United States take as much as 30 percent of the Canadian market while the Canadian industry looks increasingly to higher-priced export markets.
“Canadian producers have become really the low-cost providers of high-quality protein with about 67 percent of our pork products being sold outside of Canada,” said Fitzgerald.
Dickson said the U.S. country-of-origin labelling law adds to the income problem.
Manitoba used to export more than six million weanling pigs a year for finishing in the United States, he said. COOL has reduced the total to 3.5 million “because packers down there would not want to get involved with multiple labelling.”
He said COOL also has sharply cut the export of slaughter hogs to U.S. plants from its pre-COOL level of one million.
The testimony left Manitoba Conservative senator JoAnne Buth wondering if the sector has a future.
“Comments like, ‘Canadian producers are paid the lowest,’ ‘feed prices have never been higher,’ ‘we are losing $30 per animal on a consistent basis,’ ” she said.
“What is the viability of the industry and how long can producers hang on?”
“I wish we knew,” replied Fitzgerald. “We would be paid a lot more for our jobs.”
