No ad hoc payments | Ag minister tells producers to hedge prices, save for disasters
BRANDON — Governments didn’t do much for the hog industry when it staggered into financial crisis in 2012, and the federal agriculture minister says farmers shouldn’t expect it to leap in if there is a repeat crisis this year.
“We run under the basis of marketplace, not mailbox,” Gerry Ritz told reporters during Manitoba Ag Days.
“The problem with ad hoc (programs and payments) is it destroys market signals. It doesn’t let people adapt and forward think and plan what they need to do.”
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Last year’s disaster for hog producers was caused by a rapid escalation of feedgrain prices that occurred when the U.S. Midwest drought demolished corn crops. Pork prices also weakened for a couple of months. The combination of high feed prices and lower hog prices led to losses of up to $50 per pig.
Thousands of farmers fell into financial danger and some went broke or quit farming rather than continue to lose money.
Some in the hog industry called for emergency aid packages to stop the financial freefall, but few provincial governments offered substantial aid, and the federal government told farmers to rely on existing safety net programs.
Feedgrain prices had fallen by mid-autumn and hog prices had risen enough to stabilize the industry. Spring and summer prices are looking profitable.
However, the U.S. drought situation has not gone away. Little can be done to relieve the situation during the winter, but the Midwest will need lots of moisture this spring to alleviate the deficit left by last year’s drought and provide enough for U.S. corn, soybean and wheat crops.
Many crop analysts predict prices will increase again if dry conditions continue, something that would badly damage farmers who have not hedged their feedgrain prices.
The Manitoba government is believed to be close to unveiling a farmer-funded support program that will help farmers cope with the losses of last summer and fall and cover problems that develop in the future.
The program is believed to be based on payments made to farmers during times of negative margins, which farmers then pay back during profitable periods.
Ritz said farmers should make sure to participate in existing programs that are designed to cover short-term disasters.
“We’ve got programming that’s there for them,” he said.
“We said right from the start (in 2012) that anything we do would come through the programming that was there. A tremendous amount of money has gone out through Agri-stability and so on.”
