Officials with Saskatchewan’s cattle and hog industries say short-term loans offered by the provincial government will help producers through current difficulties.
Agriculture minister Bob Bjornerud announced a $90 million program just days before Christmas, saying immediate assistance was required while discussions with Ottawa on future needs and programs continue.
“Although the federal and provincial governments have been developing a national response, the government of Saskatchewan, I believe, listened to the producers who told us they needed immediate assistance,” he told a news conference attended by industry leaders.
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The combination of a high Canadian dollar, escalating feed costs and low prices has led to losses in the livestock sectors. Florian Possberg, chief executive officer of Big Sky Farms, said hog producers are also struggling with the low prices typical of the holiday season and the traditional low point of the four-year hog cycle.
“This is sort of the low of the low,” he said.
Hog producers are expected to use about $30 million of the low-interest loan funds. They can apply for loans for hogs marketed in any week between Oct. 1, 2007 and May 2, 2008, based on 90 percent of the difference between $140 per hundred kilograms and the Saskatchewan weekly pooled price for market hogs.
A $10 per weanling hog loan is also available in the same time period when the price is below $140 per ckg.
For cattle, the loan is $75 per calf, feeder or bred heifer based on the
Aug. 1, 2007, inventory.
The maximum loan is $5 million.
The interest rate will be the government’s cost of borrowing, which currently is about four percent.
The repayment terms for market hogs include a requirement that between May 3, 2008, and April 30, 2009, in any week where the price is more than $140 per ckg, one-third of the difference is applied to the loan. Beginning May 3, 2009, the balance will be repaid over a three-year term.
Weanling loans will be repaid over three years starting May 1, 2009, and the cattle loans will be repaid over three years starting Jan. 15, 2009.
Bjornerud said the province has also joined the new AgriInvest and AgriStability programs. He said despite ongoing discussions he didn’t believe a national program for cattle and hog producers would materialize.
As well, he noted that some of the federal money recently announced by agriculture minister Gerry Ritz wouldn’t flow until March.
“That’s why we’re here today with a loan program,” he said, adding he knew not all producers wanted another loan.
Saskatchewan Stock Growers Association president Dennis Fuglerud said loan programs avoid countervail action by the United States. The industry had asked for more than $75 per head but he said the amount would be adequate.
Saskatchewan Association of Rural Municipalities director Ray Orb said the program would give producers breathing room.
Fuglerud said rationalization is occurring, pointing to the larger number of herd dispersals than usual this fall.
“Some of that I think is probably producers that are being forced out of the business, not because of no net worth but because of a lack of cash flow,” he said.
Others are tired of the low returns and opted to get out.
Saskatchewan Cattle Feeders Association president Bill Jameson added that this happens regardless of economic conditions.
Saskatchewan has the third-largest beef cow herd in Canada and nine percent of the country’s hog production.
