SASKATOON (Staff) – The chair of Saskatchewan’s monopoly hog-marketing agency says a dual market will lead to lower hog prices and a decline in the province’s efforts to open new markets.
Peter Volk, of Tramping Lake, Sask., said the board of the SPI Marketing Group has met with members of the Saskatchewan Association of Hog Marketers, a group calling for a dual market, twice in the last four months.
He said the SPI board is seeking a compromise to allow individuals to sell without damaging the power of single-desk selling, but SAHM isn’t satisfied.
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“If they want to talk, we are open, but if they are going to start a revolution that might benefit a few but harm the industry, then the balance of producers will do what they have to do,” Volk said.
“The main reason for SPI is so that producers don’t fight each other. Under competition, the only losers are farmers and the only winners are packers.”
Meanwhile, Jim Morris, SPI’s general manager, said the new group is complaining about matters outside SPI’s control and also is spreading wrong information.
The new group says Manitoba and Alberta hog producers get as much as $3 a hog more than Saskatchewan.
But Morris said because Saskatchewan is farther from major markets than Manitoba or Alberta, prices there are always lower.
But this year the situation is compounded.
“I don’t think it’s a secret that our major buyer here (Intercontinental Packers) is struggling,” he said, referring to the legal battle within the Mitchell family over control of the Saskatoon hog processor.
“That means there have been limits on what we’ve been able to extract from our major buyer.”
Meanwhile in Alberta, disruptions in the market caused by past uncertainties over the Gainers plant have been resolved by the sale to Burns, so prices to producers there have returned to more normal levels, Morris said.
Almost all hog processing plants are having a bad year and SPI’s small facility in Moose Jaw is no exception, despite efforts to control costs. Losses there are a drain on SPI’s pool accounts.
Morris said SAHM’s suggestion that single-desk selling is the reason hog numbers are falling this year is
ludicrous.
“Has the group not heard of $4 barley?” he asked, referring to record high feed costs. Hog production is declining all over North America.”
Morris said there are only five packers buying hogs in Western Canada, not counting SPI’s own Moose Jaw plant.
If Burns buys Intercontinental, that will increase the concentration.
“It doesn’t take much of a rocket scientist to say: More sellers. Fewer buyers. Inevitable outcome: lower prices,” he said.
