Farm Credit Canada’s customers in the again-battered hog sector will get the chance to adjust or put off loan payments through a new "customer support" program.
The federal farm lender on Wednesday described its support program as having "flexible solutions tailored to each situation," offering payment schedule adjustments or deferrals "to help see customers through a short-term cash flow problem."
The Regina-based agency said it "will be reaching out" to its hog farmer customers, but farmers can also contact their local FCC representatives or the lender’s customer service centre to "discuss their individual situation and options."
"While many agriculture sectors are doing well, some hog producers are facing unprecedented losses, depending on the structure of the operation," said Barry Smith, FCC’s vice-president for western Ontario operations, in a release Wednesday.
"Producers who grow their own feed or have other revenue streams from a diversified operation may be in a better position, but FCC is committed to looking at each case individually and assessing each one on its own merit."
Dry conditions in parts of Ontario and Quebec, plus drought in the U.S. Midwest affecting nearly 90 per cent of that country’s corn fields, have driven up feed prices by as much as 50 per cent, FCC said.
"This is compounded by low hog prices brought on by producers having to eliminate or reduce the size of their herds, adding to an oversupply of pork."
"May want to revisit"
Hog prices and producers’ margins are expected to improve on "stronger seasonal demand and reduced supply" in the spring and summer of 2013, FCC said.
Even given the disappearance of hog farms during the past five years, "there remain a substantial number of operators who are confronting the risks, costs and operational challenges," Smith said Wednesday.
The hog sector accounts for about four per cent of FCC’s $24 billion total portfolio.
In view of the U.S. Midwest drought and the resulting spikes in corn values, FCC in August had advised hog producers to look carefully at risk management tools such as price contracts or hedging feed costs, which could "help make the best of a difficult situation," according to the lender’s senior ag economist, Jean-Philippe Gervais.
"Another strategy used by hog producers is to maximize feed efficiency by adjusting diet formulations and ensuring that feeding equipment is working accurately," he said in an Aug. 14 release.
"Producers may want to revisit their planned marketing weight of pigs in relation to weight discounts and feed prices."
Manitoba’s KAP calls for nine-figure hog farm aid, Sept. 17, 2012
Maple Leaf sees slightly smaller hog supply ahead, Sept. 13, 2012
Hog farmers’ lenders remain tight-fisted: CPC, Feb. 4, 2010