Alberta Hog Industry In A Financial Crisis

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Alberta hog producers will be receiving $2.5 million in rebated levies, but it won’t be enough to avert a pending crash in the sector, say marketing board officials.

The levy rebate of 85 cents a pig will total about $2 million for market hogs sold to packing plants by Alberta producers, and $500,000 for about 300,000 weaner pigs (to nine weeks old) and isoweans (to three weeks old) sold into the U.S., said Jim Haggins, the Alberta Pork chair from Linden.

Haggins credits “the forward thinking of past boards who built up an investment reserve,” for being able to cover any operating shortfalls for this year.

But the money won’t be enough for many.

The crisis is most pronounced in southern Alberta because feed grains, both wheat and barley, are higher there than in other regions in the province, said Mark Wipf of Lakeside Colony near Cranford and Region 1 Alberta Pork director. There are about 60 hog producers in his region, the majority of them colony operations, he said. Average returns for market hogs are at the break-even point, he said, although some producers have market contracts that earn them an additional $10 a hog.

Haggins said younger producers and those with little equity are being hit hard.

“I just got a call from one producer who says one of his creditors has given him three weeks to come up with a substantial amount of money,” said Haggins. “If he can’t, he will have to give his farm to the creditor.”

But even well-established producers are facing increased scrutiny from lenders, he said.

“Servicing the debt built up over the past three years by producers struggling to stay in the industry has been a major concern,” said Haggins. “Now some producers with good debt-to-equity ratios are not able to get more money to keep going to wait for better times.”

Although hogs are fetching $1.55 to $1.60 a kilogram (carcass weight), people don’t seem to realize the severity of the crisis, said Haggins.

“Normally, we could make a little money at those prices, but with everything going wrong in the industry, it is impossible to make money,” he said. “In Alberta, we find ourselves in a unique market situation, where producers, already the lowest paid in the world, must also contend with escalating production costs.”

Major changes in the pricing formula are needed because it costs Alberta hog producers an extra $10 an animal compared with American producers, said Haggins.

Haggins said he would like to see packers, wholesalers and retailers share some of their profits to help keep Alberta hog producers operating, and consumers buy Canadian and Alberta pork instead of cheaper imported products.

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“Normally,wecouldmakealittlemoneyatthoseprices,butwitheverythinggoingwrongintheindustry,itisimpossibletomakemoney.”

JIM HAGGINS

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