Stabilization program | Manitoba Pork Council says the decision will prompt more producers to leave
The Manitoba government’s refusal to embrace a stabilization program for hog producers will cause a further exodus from the once booming provincial hog farming business, say industry leaders.
They also warned that the province might permanently lose an entire class of hog farmer and see the industry become almost completely large scale and corporate owned.
“It’s very possible that within five years all that could be left are the corporate and the Hutterite colonies,” said Perry Mohr, manager of the Hams Marketing Co-operative, in an interview.
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“All that’s left today are the corporate farms, the Hutterites and independent farmers who have both pigs and grain.”
The Manitoba Pork Council, desperate to save Manitoba’s independent family farms but careful to avoid government subsidization or outright financial support, crafted a program that would have advanced money to farmers but have it paid back with interest.
Farmers would be paid money from a provincially backed $75 million line of credit based on prices underneath a moving cost of production. The money would be repaid at a rate of $5 per head when farmers were making money again. Under such a design, the program would be self-funded by farmers and not involve direct government payouts.
Pork council officials say the provincial agriculture department seemed to believe the program was well-designed.
As well, agriculture minister Ron Kostyshyn spoke positively about the proposed program a number of times, including during the Keystone Agricultural Producers convention in January. He said he expected to make an announcement soon.
However, pork council officials said the agriculture department’s seeming support, always lukewarm, was not enough to get support from a government attempting to cut costs and reduce potential exposure.
As well, the government said it wanted hog packers to take on most of the credit risk.
“They said the packing plants should provide the bulk of the guarantees,” said pork council general manager Andrew Dickson.
“That blew us away.”
Dickson said he couldn’t understand how the government would expect private businesses such as the packers to extend credit to independent farmers, over whom they would have no control.
“Viterra doesn’t loan money to grain farmers. Cargill doesn’t lend money to cattle producers. These companies aren’t banks,” said Dickson.
He said the government seemed unwilling to take on credit risk for the program, and officials said they thought they might lose all the money.
“They felt they would actually have to spend the $75 million,” said Dickson.
That view is echoed in a written response from Kostyshyn about the situation.
“While the province continues to work with Manitoba Pork Council on possible solutions, their recent proposal is too much of a financial risk during these uncertain economic times,” said the statement.
“With another flood on the way, any request for support above (existing safety net programs such as AgriStability and AgriInvest) must be critically reviewed.… Despite what some in the industry say, these programs have already provided hundreds of millions of dollars in support to the industry.”
Kostyshyn said the province has supported waste water treatment facilities at packing plants and other infrastructure funding over the years.
Mohr said many farmers stayed in production this year because summer hog prices looked profitable and they believed the loan program was likely to soon carry them across the present period of losses.
However, China and Russia have since imposed ractopamine bans, cutting pig prices by about $20 per head.
And now the province’s refusal to support the stabilization program undermines any confidence that some had that they could survive until profitable times.
Dickson said the impact of the provincial government’s refusal to establish the program will be an even greater slide in provincial hog production, which is undermining the viability of the second shift at the Maple Leaf Foods plant.
“They’re short on pigs,” said Dickson.
Mohr said farmers dedicated to standalone hog operations have left the business, unable to handle the profitability swings of recent years without stabilization programs such as the one just rejected.
“The days of being a professional pig producer, where you were able to make a decent living from producing pigs and buying grain, are over,” said Mohr.
Many farmers with cropland and pigs will be able to survive a little longer, but they too might back away from the industry and focus solely on grain if the price swings are too great.
That would leave little but the Hutterite colonies and the directly owned corporate farms producing pigs in Western Canada.
“That’s what Maple Leaf and Olymel were doing when they bought Puratone and Big Sky Farms: ensuring that they would continue to have pigs to put through their plants,” said Mohr.
