THE WARNING sirens are sounding. The pork industry is going through one of the most difficult times it has seen in years.
We should heed the alarm.
This time the main threat is to the processing side of the Canadian industry and problems experienced by processors have a way of filtering down to producers.
Canadian producers yield more pigs per sow per year on average than their American counterparts and this key advantage has been diminished by rising feed costs and issues at the processor level.
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The problems facing processors include:
- A high Canadian dollar relative to U.S. currency, which cuts into the value Canadian processors receive for their exports.
- Operating expenses not incurred by American packers.
- A shortage of suitable workers.
Olymel’s recent announcement that it would cut prices it pays producers delivering to its Red Deer operation by $12 a hog served to highlight these problems.
The hog industry has always operated in cycles, but this time things are different. This is no North American-wide downward trend based on supply and demand. It is a Canadian phenomena masked until recently by a low dollar.
Any emergency financial aid should be delayed until the Canadian Agriculture Income Stabilization plan, and/or its successor, is given a chance to do its work. But there are immediate steps that could help place the Canadian industry on a more competitive footing.
Key among them is bringing Canadian processor costs in line with American packer expenses. Ottawa could review its inspection fees and drop charges not incurred by packers south of the border.
It’s estimated that Canadian Food Inspection Agency fees cost Canadian pork processors and producers more than $20 million each year, according to a coalition comprising the Canadian Meat Council, Canadian Pork Council and Canada Pork International. American processors are not charged for inspections.
As well, the federal government must find ways to make more labour available.
Lack of workers has prevented Maple Leaf in Brandon and Olymel in Red Deer from using their facilities at full capacity, which reduces efficiency and cuts directly into the packers’ bottom lines. That, in turn, reduces the prices they can afford to pay producers.
Ottawa could issue more temporary work permits to foreign workers, set up better job recruitment processes overseas and speed immigration.
Improving Canada’s drug regulation process so producers here have the same veterinary treatments available to American producers, and at similar prices, would also boost Canadian competitiveness.
With global meat demand expected to double by 2020, Canadian pork could be in a position to capture a good portion of that growth, given proper nurturing now.
Benefits would reach beyond the pork industry by generating foreign income in trade and investment and by providing a larger feed market for grain producers.
Bruce Dyck, Terry Fries, Barb Glen, D’Arce McMillan and Ken Zacharias collaborate in the writing of Western Producer editorials.
