Alberta’s pork producers need government aid of $35 a head just to keep their heads above water in the short term, say industry officials.
“The hog industry desperately needs a lifeline,” said Alberta Pork chair Brent Moen. “Our producers are drowning in a sea of red ink, and we have our federal and provincial bureaucrats debating over what colour of life-jacket they should throw to us.
“We need the money today so that we can pay our feed bills, our vets, our transporters, and our labour.”
It costs producers $185 to raise a pig but the estimated gross sale price over the next few months is expected to average just $150, Alberta Pork’s board said in a mid-April letter to Premier Jason Kenney requesting government support. The amount requested was $35 a hog from May to October, or more than $40 million total. The Canadian Pork Council, which says the national sector is facing losses of $675 million, is asking Ottawa for a cash injection of $20 a head. Even if the province covers the other $15 “we know we’re going to take a pretty significant financial loss over the 2020 business year,” Moen said April 23.
“Prices are extremely low, and given the crash in the futures markets and the loss of food-service business, they don’t look really good until at least October or November,” he said.
“The current cash crunch that we’re facing is affecting whether producers can pay their bills and is in fact putting the financial viability of their farms at risk.”
Canada’s pork sector was already struggling as a result of African swine fever and other factors, including America’s trade war with China, he added.
“That’s left farmers with no cushion to manage the current financial crisis,” said Moen.
Even though retail pork sales are strong, temporary closures of processing plants in Canada and the U.S. because of COVID-19 are creating a backlog of hogs. A two-week shutdown at a Quebec plant caused a backlog of about 50,000 hogs from Quebec and Ontario (with some market-ready pigs having been euthanized in those provinces because there were no buyers). While the Quebec plant has since reopened, it illustrates the risk to Alberta hog producers, said Darcy Fitzgerald, executive director of Alberta Pork.
It’s vital that everything be done to keep processing plants running, he said.
“We cannot simply shut down everything,” said Fitzgerald. “We need to get that message across.”
“Time is of the essence in the pork industry,” added Moen. “Pork producers cannot simply sit idle — we need to feed our animals. We just can’t shut things down. It’s impossible to stop production with six months of supply growing on our farms every day.”
Alberta Pork and the national pork council have also requested an emergency AgriInvest deposit of five per cent of producers’ 2018 allowable net sales (to a maximum of $100,000 per producer) and an increase to the AgriStability trigger to 85 per cent (from the current 70 per cent) for the 2019 and 2020 program years.
“We’ve asked the government to waive the required matching deposit and simply allow the producer to access the funds that are available,” said Moen.
In the meantime, producers should try to trigger a payout from their AgriInvest account, he added.
“When we’re talking to the government and negotiating with them, the first thing that comes up is that hog farmers have got an abundance of money — in their mind, an average of $40,000 per producer — in the account, and it’s supposed to be there for emergencies,” he said.
“They don’t seem to understand that $40,000 won’t even cover a week’s feed bill. Nonetheless, we need to remove that obstacle from their challenge.”
Without additional government support, “the risk of a supply chain failure increases as the pandemic drags on,” he said.
“With processing facilities either closing or cutting back in Canada and the U.S., pig supply backlogs and record-low margins are seriously affecting the ability of our industry to continue operating sustainably while providing food for Canadians and the world,” said Moen.
“We recognize that this is one of the most essential services. If people want to continue to eat, we need to support farmers. No farmers, no food.”