Hog processors need to help Canadian producers stay in business

Broken There’s no obvious solution of how to repair the value chain in the pork business

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George Matheson, a pork producer who sells directly to consumers from his farm in Stonewall, Man., gave his view of the state of the hog sector at a Keystone Agricultural Producers meeting last month.

The futures say that it’s going to be deep into 2013 that we’re going to remain in the red. Short term there is very little relief for us. Very few producers are interested in any type of advance payment. They’ve got enough debt. They’re probably going to leave rather than take on something like that. The government has told us that there will be absolutely no ad hoc payments whatsoever. So for the next 12 months things don’t look very good at all.

Long term I’m disappointed to say… there’s no plan whatsoever for the industry long term.

I’m going to give you my view on what I think needs to be done long term.

And (to another producer) I appreciate your comments earlier today about this industry and how broken it is. It is absolutely broken, and to me the biggest problem is the value chain is not working. It hasn’t worked for quite a while.

We are at a definite disadvantage to the U.S. producer. I would say we’re at a $10-a-hog deficit to the U.S. producer. That doesn’t sound like very much. But if you take even a modest farm today producing 10,000 hogs times 10 is $100,000 you’re behind your U.S. counterpart in one year. The exchange rate has been behind quite awhile. So if this sort of thing goes on for five years as a producer you’re down a half-million (dollars) and really you are out of the game. You’re not going to compete with your American competitor at all.

As far as the exchange rates there doesn’t look to be any relief in the near future. The buck is going to stay about even. If it was in the ’90s that would probably make up the difference because we are paid in American bucks.

What I feel needs to happen is the processor, if he wants an independent producer in this country, he’s got to sit down with reps from the producers and they’ve got to come up with a way this $10 can be paid to the producer so they can continue to exist. I don’t know if that can be done at all or not.

There’s 25 per cent of Canadian consumption coming in from the U.S. If we could put a levy against that pork, slow it down perhaps, that would give the processors an opportunity to pay the producer more.

I’ll tell you to be quite honest I think the processor can dig a little deeper into his pockets and pay the producer and hopefully between different things we can make up that $10 difference.

Otherwise, to be quite frank, I think the independent producer in this country is dying a slow death. They are halfway finished. If we cannot be competitive with the U.S. we’re finished, other than vertical integrators — the HyLifes, the Maple Leafs, because nobody (independent) is going to see pigs produced in this country. Olymel is interested in Big Sky. They’re going to ensure their production.

People want to know how I’m staying in. In a way I’m a vertical integrator — a flea on the back of a dog really, the dog being HyLife or Maple Leaf. That’s how I am continuing to be a pork producer in this country. As an independent producer, things do not look very good until there are changes to that value chain.



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