NOTORIOUSLY cyclical. That’s the way many describe the Canadian hog industry. But the crisis it now faces goes beyond the typical valleys in price.
Today’s disastrous losses are exacerbated by new elements: high feed prices boosted by low world grainstocks and American biofuel demands and a high Canadian dollar relative to the U.S. greenback. These elements, which would have been impossible for hog producers to predict or forestall, occurred during a high point in the hog production cycle and a low point in the price cycle.
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The industry is nearing collapse. Immediate government intervention and aid are needed to salvage it. Federal assistance so far, via the Canadian Agricultural Income Stabilization program and its successor, have proven inadequate.
Governments must heed calls for an immediate interest-free loan program and payouts for sows liquidated as producers comply with the need for herd reduction.
Such measures could rescue an industry that has expanded in recent years with provincial and federal government encouragement. And they would be trade friendly, thereby protecting international hog and pork trade.
Governments, both provincial and federal, are reluctant to bail out troubled industries. They worry about precedent and public perception.
In the hog sector, there are markedly fewer farms than there were 10 years ago, but more hogs. Producers have achieved more efficiency through larger-scale operations. That doesn’t make the industry any less worthy of assistance.
It is unacceptable to allow hog producers to flounder and an industry to collapse when years of government policies have contributed to prairie hog industry development.
To do so ignores the long-term advantages of a domestic pork industry, ready markets for feed grains and the power of an economic engine that generates numerous spin-off benefits for the national economy and rural development.
As China and developing countries increase their prosperity, signals indicate pork demand will grow. A healthy Canadian hog industry will be able to take advantage of that when the economic tide turns – as it inevitably will. Without government assistance, opportunities to create value-added industry spinoffs and increase international trade will be lost.
Market signals indicate the crisis could be relatively short-lived. Futures markets are signalling recovery and there are early signs that U.S. producers are scaling back their breeding herds, as Canadian producers have been doing for months. A smaller North American herd would have a positive effect on prices.
It’s also worth noting that a healthy Canadian pork industry would have good market access, room for expansion and an excellent herd health record that gives it a competitive advantage.
If the hog industry can get past the crisis of today, there is potential for it to contribute more in the future.
It depends on response from federal and provincial governments. They should provide assistance with all possible speed.
Bruce Dyck, Terry Fries, Barb Glen, D’Arce McMillan and Ken Zacharias collaborate in the writing of Western Producer editorials.
