Alberta pork producers seeking short-term help

Wednesday Dec 15 2010
by Barbara Duckworth, Calgary Bureau, The Western Producer

LEDUC, Alta. — Alberta pork producers are seeking short-term aid to pull them through an unprecedented economic crisis where returns on market hogs are well below their cost of production.

A meeting is set for Dec. 17 to discuss a sustainability support fund for producers until a hog price insurance scheme is ready this spring or markets improve.

Alberta Pork, the Western Hog Exchange, Alberta Agriculture, Alberta Financial Services Corp. and hopefully federal and provincial packers who buy pigs from Alberta farmers, will discuss emergency assistance as well as figure out a new payment model for producers.

"It is in the early stage of development. There are no guarantees," Alberta Pork chair Jim Haggins said at the organization's annual meeting in Leduc Dec. 9.

"We want packers to work with us on this support fund," he said.

The program needs to be retroactive to Nov. 1 and Alberta Pork is willing to provide funds from its own reserves if that helps, Haggins told the delegates.

Deputy agriculture minister John Knapp told producers they are eligible to apply for an advance for 2010 through the Agri-Stability program, but years of successive losses have cancelled out further payments because there are no positive margins left to calculate.

"There is not going to be the domestic support and there is no way our market is going to work," said Alberta Pork director Rocky Morrill.

What is needed is a new payment structure because getting paid off the U.S. Midwest price does not work anymore, he said. Packers and consumers must understand the industry is stretched to the limit.

"We have lost so many producers and we will lose so many more this winter, even if we come up with a model change, I don't know how many are going to survive, but we still have to try something," he said.

"This is not a cycle. This is not something we will hope our way through."

"We are in trouble if the packer will not recognize and start helping solve the problem," he said.

According to hog exchange published prices, Alberta producers received an average price of $1.50 per kilogram in 2005. Prices have been falling steadily since. In 2009, the average price was $1.33 and this year will close at $1.25 per kg. The cost of production is around $1.40 per kg.

And with the mass exodus from the business, there are fewer hogs left so packers are at risk as well, said Haggins.

The province is down to less than 380 farmers producing 2.87 million hogs. A single shift weekly capacity at Olymel in Red Deer is 60,000 but the available hogs week from Alberta is 49,500.

"There is currently a shortfall," he said.

For the three western plants buying hogs, total capacity is 179,100 per week but they are short 17,400 per week. Planned expansions to process 199,700 means a shortfall of 37,750.

An industry revitalization strategy conceived in 2006 has been shelved until the cash emergency is solved. The program included an Alberta branded pork program and more promotion, but the current board has decided until it can find some partners for such an initiative, it will not help.

"Adding value to the pork doesn't do a heck of a lot to get anything into our pockets. We can sell twice as much pork domestically and that doesn't mean that will get anything into our producers' pockets," Morrill said.

They are producing a good product but consumers do not know about it. Most pork is sold as generic product and does not include a label indicating it is product of Canada. Domestic support is like a social contract to feed local customers and most countries are willing to pay more for home grown, but that is not the case here.

"We have to have somebody who is going to work with us on this," Morrill said.

 



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