SASKATOON – Saskatchewan Wheat Pool is being welcomed into the province’s pork industry with open arms.
The pool announced last week it will form partnerships with farmers, local communities and other investors to develop “world-scale” pork production facilities in the province beginning in 1997.
“I think it contributes to the future of the hog industry in Saskatchewan,” said Jim Morris, president of SPI Marketing Group, the province’s hog marketing agency.
He said the move should send
a strong message to packing plants, financial institutions and other potential investors that the industry can grow and expand.
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“It’s a breath of fresh air.”
Florian Possberg, who runs one of the province’s largest hog operations near Humboldt, said the pool will bring valuable financial resources, expertise and business contacts into the industry.
“I’ve always believed in the potential of our industry and it’s really gratifying to see a major corporation like Sask Wheat Pool also see the potential,” he said.
Pool president Leroy Larsen said it hasn’t yet been determined how much the pool will invest or what it will invest in. All that is currently the subject of in-house analysis, which he hopes will be completed soon.
“The market is very strong right now and it looks like a good opportunity to move forward.”
In a press release, the pool said it is analyzing a number of possible investments, including such things as partnerships with family farms and the formation of new generation co-operatives. Contracting programs between producers and packers are also being considered.
Larsen said the decision to get into the hog industry was prompted by individual producers and community development groups who approached the pool looking for ways to diversify their local economies.
He said it fits in well with the pool’s ongoing efforts to diversify into ventures that will add value to the raw grain sold to the company by farmer-members and protect the company’s income from the ups and downs of the grain market.
“With some of the changes that are occurring with trade agreements and the higher cost of transportation that producers are facing, the need for intensifying the livestock industry is greater,” he said.
Studies indicate Saskatchewan can be competitive in world pork markets and “we think the opportunity is there for expansion.”
Pork industry officials said the infusion of capital and enthusiasm generated by the pool’s entry into the industry could mean a new lease on life for the province’s underused and struggling packing plants.
Supply prevents expansion
Morris said that is a struggle that SPI, part owner of a meat plant in Moose Jaw, is all too familiar with.
“We know we must expand and we can’t do that with the current level of production,” he said.
Possberg said any increased production brought about by the pool’s investments will benefit not only packing plants, but also feed processors, equipment suppliers, construction contractors and so on.
“An expanding, viable industry brings lots of benefits with it.”
Morris said he would encourage the pool to make equity investments and take a role in the management of whatever hog operations it gets involved in. Many of the large operations in the province carry a lot of debt and need an infusion of equity.
Earlier this summer, Manitoba Pool Elevators announced it was considering whether to get into the hog business. Larsen said Sask Pool will meet with Manitoba officials to see if there is anything the two companies could do together.
He also said the pool will work with whatever hog marketing system is in place. SPI, the province’s single-desk selling agency, is under attack from some producers who want to make their own export sales.
“We have no intention of going outside of the marketing structures that producers have developed in this province to date,” said Larsen, adding the pool won’t get directly involved in the debate over the fate of SPI unless directed to by delegates.
