TWO HIGH-PROFILE prairie hog operations announced financial difficulties last week, highlighting the crisis in Canada’s pork industry.
Stomp Pork Farms, the second largest pork producer in Saskatchewan, sought bankruptcy protection in the face of losses estimated at $40 to $60 per pig. The operation employs 250 people.
As well, Nutri-Health Group of Niverville, Man., entered bankruptcy , jeopardizing the future of its hog production, feed operation and hatchery. The firm employs about 50 people.
In both cases, the operations were significant players in their local economies via purchasing of feed grains and other inputs. Their loss, if it comes to that, will affect communities as well as the businesses themselves.
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The well-publicized causes of the current cash crisis in the hog industry include high feed costs and a high Canadian dollar relative to the U.S. greenback. Some also blame corporate concentration, Canada’s export dependence on the United States and retailers’ ability to take a bite out of farmer profits.
As always, laying blame is much easier than devising a solution.
In the short term, herd reduction is touted as a route to higher market prices. A federal government cull sow program of $225 per animal helps in that direction and at an emergency meeting last week, Manitoba producers showed some support for a weanling cull, if compensation is made available.
However, an anticipated parallel reduction of the U.S. hog herd has failed to occur, according to United States Department of Agriculture reports. Though contraction will happen eventually, given that American hog producers are also losing money, the delay could prolong the pain for the Canadian industry.
Feed prices are also likely to remain high for at least another year.
To prevent further bankruptcies, the Saskatchewan Pork Development Board and other livestock groups are calling for the elimination of a cap on federal support payments. While the program distributes about $30 per hog to most producers, larger operators are limited to payments of about $6 per pig sold because of the cap, according to the board.
Sask Pork argues that, although government policies have led to industry consolidation and increased efficiency through economies of scale, federal government programs now penalize those who expanded.
Larger operations are also crucial in maintaining the infrastructure that makes hog production possible for smaller producers.
However, the board and producers it represents shouldn’t hold their collective breath waiting for changes to the cap because calls to remove it are unlikely to be heeded in today’s political climate.
Opposition parties favour the cap and its method of supporting smaller family farms. It seems there’s political appetite to help farmers, but little to help agri-business, even in cases where the two are one and the same.
As well, the provinces will be reluctant to support removal of the cap because they can’t measure or control the cost of such a move.
Saskatchewan and Manitoba could potentially incur huge expenses, while Ontario and Quebec governments sense more support for the cap because most farms there are smaller than those now in trouble on the Prairies.
Ottawa has responded to recent calls for help by increasing emergency advances to a maximum of $400,000, up from the previous maximum of $25,000. That change was welcomed by the Canadian Pork Council, but announcements didn’t include discussion on removal or even temporary elimination of the payment cap that is now troubling larger hog producers.
In any case, federal government action on another front may be required.
According to reports from an emergency meeting last week in Steinbach, Man., American hog feeders have begun to refuse Canadian weaners because of impending country of origin labelling requirements that will likely come into effect in the U.S. this September.
If those assertions can be documented and direct harm to the hog industry can be proven, Canada might have a case for a challenge under the North American Free Trade Agreement.
Whether the government would agree to a challenge remains to be seen, in light of the political climate and American pre-election machinations that have already called the future of NAFTA into question.
Such are the complexities facing the industry, with no easy solutions. It is going to require analysis and co-operation on the part of producers, processors and governments to see the Canadian hog industry through these difficult times.
Bruce Dyck, Terry Fries, Barb Glen, D’Arce McMillan and Ken Zacharias collaborate in the writing of Western Producer editorials.
