“It’s quite clear that the way we’ve done business over the last number of years really isn’t sustainable for the industry.”
After three years, Alberta’s hog industry is still in the midst of what Paul Hodgman calls “the perfect storm.” But Hodgman, executive director of Alberta Pork, says that at least the problem doesn’t seem to be escalating, and those left in the industry are riding it out.
Hodgman announced his retirement last year, and just last week Alberta Pork said he will be succeeded by Darcy Fitzgerald, formerly of AFAC. In a interview in his Edmonton office, Hodgman said the industry was beginning to recover last year, but then was hit hard by H1N1, sending it even further downward.
Hodgman said it was initially hoped the industry would have improved by spring 2010, but it looks as those producers will not be able to see any sustained profits until fall.
“It’s not as desperate as it was in terms of what’s happening today, but it’s the cumulative number of years that this has gone on that has drained everybody’s equity,” he said.
“In many cases, they’re up against credit limits and those kind of things so it’s very problematic from that standpoint,” said Hodgman. “There are some different things happening. Alberta made a lot of adjustments in the last two years in terms of decreasing numbers and unfortunately, producers,” he said.
Canada is one of the leading exporters in pork and Alberta is the fourth-largest player in the Canadian market. Canada had built its hog industry on the promise of a strong export industry, which was working well until several fundamentals changed rapidly.
“One could argue that if these changes had happened over a five-year period we would have adjusted along the way,” Hodgman said. The strong Canadian dollar affected exports, as did increased feed prices and ountry-of-origin-labelling (COOL) in the United States.
The federal transition program, in which government funds have been allocated to producers who want to get out of the industry, has had a number of applicants from Alberta.
Hodgman sees several problems with the federal loan program, which has been extended until the end of March.
“It’s been a failure in many ways,” said Hodgman. He believes it has been hard for medium and small producers to use. In addition, some financial institutions have been reluctant to get involved with this program, which has made things difficult for producers.
There are approximately 400 pork producers in Alberta. There would have been about 35 per cent more three years ago, said Hodgman. The numbers of hogs in Alberta has dropped from about 3.2 million to about 2.2 million. About a third of Alberta’s production comes from larger farms, a third from Hutterite brethren, and a third from smaller and medium-sized independent farms.
Operators that have exited the hog industry have included small, medium, and large producers. Hodgman says not all of the producers who decided to exit were going broke. Some decided to retire, and some decided to get out of the industry, continuing a long trend in the industry. Hodgman notes that in 1970, there were 20,000 hog producers in the province.
“It’s not really much different than Walmart swallowing up all the smaller stores,” he said. “It’s a sign of the times.”
There are still some producers who are choosing to leave the industry, but things are slowing down. “The people that are left are good managers. They are dedicated, they want to ride this out, want things to get better and they’re committed to being in this business.”
Hodgman says Alberta Pork’s operation will be affected when provincial legislation making checkoffs refundable takes effect in September 2010.
He expects some producers will withdraw their funds for a variety of reasons.
Alberta Pork is currently in phase five of a plan to revitalize the industry. Hodgman says it needs to change.
“It’s quite clear that the way we’ve done business over the last number of years really isn’t sustainable for the industry. We have to make some fundamental changes.”