Farmscape Article 3282  August 29, 2009

Canada's pork producers are being assured that officials with the Canadian Pork Council (CPC) and Agriculture and Agri-Food (AAFC) Canada are working as quickly as possible to finalize details of a “comprehensive restructuring plan for Canadian pork producers” announced earlier this month.

The three part program was unveiled August 15th by federal agriculture minister Gerry Ritz at the University of Manitoba's National Centre for Livestock and the Environment south of Winnipeg.
The package includes funding for international pork marketing initiatives, access to interest bearing government backed credit and incentives to help struggling operations transition out of the industry.

“Our industry has gone through a prolonged period of three years of continuous losses and the industry is in a complete melt-down at this point in time,” says Canadian Pork Council (CPC) chair Jurgen Preugschas.
He cites factors such as the high value of Canadian dollar, the global economic situation, high fuel, feed and energy prices and most recently the H1N1 crisis.

Manitoba Economy Impacted by Pork Industry Crisis
Manitoba Pork Council chair Karl Kynoch observes the crisis facing the pork industry is impacting other segments of the Manitoba economy.
“A lot of the spin-off jobs that are related to the hog industry are really starting to take a hit now. We're starting to see some of the feed mills cutting back on staff, the odd one even forced to close. We've seen trucking companies that have had to lay off owner-operators of trucks and lay off some of their own drivers. We're starting to see a lot of spin-off effects from the hog industry suffering and I think we're going to see a lot more of that to come over the next few months.”

Saskatchewan Economy Dependent on Livestock
Saskatchewan Pork Development Board general manager Neil Ketilson observes the pork industry is a very significant contributor to the Saskatchewan economy.
“We have about a $300 million business in the province just with the sale of pork plus all of the indirect kinds of economic activities that surround it, the feed mills, the veterinarians, the transportation services, a whole host of other things. If you consider the spin-off of all of those things, we are very significant to the agricultural economy.”
As well, he stresses, “We are very important to a lot of the grain farmers out there in terms of a market for feed grains and so the province is very dependent on the livestock industry and hogs in particular.”

Industry Government Discussions Continue
Since the August 15th announcement officials with the Canadian Pork Council and Agriculture and Agri-FoodCanada have been working to iron out full details of the program.

CPC public relations manager Gary Stordy explains the three components of the program were announced prior to finalizing details to give producers some indication that programming is being developed and will become available very soon.
“Most pork producers are going in to visit their banks this month or very soon for essentially their annual review. This was essentially a message to banks that they should hold off from making any decisions for producers. There's these programs that are going to be coming available very shortly and we do believe they're going to be very successful.”

Stordy notes representatives of the Canadian Pork Council and Agriculture and Agri-Food Canada have been meeting on an ongoing basis, most recently just last week, to discuss details of the hog farm transition program.
He concedes there are still some hoops to get through in terms of developing some of the criteria for the program and what is going to look like.
“We've been very pleased with the cooperation we've been getting from Ag Canada on this. They're working with the industry to develop a program that's going to work for producers,” he says.

Need for Timely Action Recognized
Stordy acknowledges, “There's a very clear understanding that the industry is having its difficulties and that these programs will work and the need to get these programs out as soon as possible.”
He says producers have questions are anxious to know how they can apply, how they can get more information and how the program will affect them.
“Unfortunately those details are not yet available.”

Trade Friendly Programming Critical
Ketilson notes, when pork producers originally approached the federal government, the call was for a direct cash injection.
He concedes, “A lot of the farmers out there will not be as pleased with a loan as they would be with direct cash. But one of the things that the federal government was quite insistent on is that we don't create an indirect negative impact on the industry through some sort of trade action that the United States might bring about through countervails.”
He observes the United States has been adamant that there be a level playing field between the two countries.
“Any direct subsidies or payments to our producers are deemed to be negative to their industry,” he says.

Kynoch agrees, “The governments went a long way to make sure to minimize the trade implications.”
He says, despite several threats from the U.S. pork industry related to government support of the Canadian pork industry, this latest package is no different than what is being provided to American producers.
He points out most of the money is being made available in the form of loans that will have to be paid back by producers. As well he is confident the Americans will be happy with the $75 million dollars allocated to help producers close their barns and exit the industry.
He notes this latest swine herd reduction program is much broader than the previous Cull Breeding Swine program.
“This time it's being offered to the weanling barns, the feeder barns and the sow barns so it's being offered to the industry as a whole. That should be very positive with our U.S. counterparts.”

“Everything is totally trade neutral,” says Preugschas.
“On top of that we have reduced our sow herd in Canada over the last the last three years. This will reduce it even more. I think most important is the Americans need to reduce their sow herd now too. They have to take us as an example, do the same thing and then it will be better for producers on both sides of the border.”

Federal Announcement Appreciated
“We're really thankful and appreciate the support Mr. Ritz and the federal government have shown toward the industry,” says Ketilson.

Kynoch agrees, “This package is huge.”
He says the August 15th announcement was important in providing a heads up to producers on what government is prepared to offer to help producers move forward and make some tough decisions.
“Producers needed to hear the announcement so they could decide what to do with their operations and what to do going forward, whether to restructure and continue or whether to decide to exit the industry.”

Stordy acknowledges he would like to see details on the structure of the various components of the program announced sooner than later but he is not prepared to specify any specific time frames. However, he says, details will be announced through the media and be available through the provincial pork offices as they become available.

Producers Encouraged to Evaluate Options
Meanwhile Stordy encourages those producers who are considering the long term loans to take a close look at their operations and, as details are announced, look at what options what will work for them.
“We do understand they're facing some liquidity crisis but, at the end of the day, we do understand that there is a number of producers that may decide to leave and consider the hog farm transition program.”

Staff Farmscape.Ca