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Hog Producers Want Pork Profit-Sharing

“A fundamental restructuring of our industry with shared accounting across the supply chain is imperative.”

– JURGEN PREUGSCHAS, CPC CHAIRMAN

Hog producers want a share of the money which other industry players – processors, food manufacturers, wholesalers and retailers – make from selling pork.

The Canadian Pork Council is calling for a way to pass some of the profits from the pork value chain back to the farmers who raise the pigs.

“We understand that a fundamental restructuring of our industry with shared accounting across the supply chain is imperative to a future viable pork industry in Canada,” Jurgen Preugschas, CPC chairman, told a producer meeting.

The notion of profit-sharing is one of three elements in a recovery plan for producers developed by the pork council.

NO TRACTION

It’s a radical idea which may not have much traction with the rest of the industry.

Preugschas said CPC has floated the concept to the Pork Value Chain Roundtable, which includes packers and processors. “They’re not as motivated as the rest of us are.”

Preugschas could not say how profit-sharing would work. But he suggested it might be along the lines of a Danish model, in which producers participate in the value chain.

In his speech at a June 22 rally sponsored by the Manitoba Pork Council, Preugschas also called for an immediate government bailout package to help producers suffering from an unprecedented financial crisis.

He called it an H1N1 recovery plan, after the so-called “swine flu” which spooked many consumers into wrongly believing that people could get the virus from eating pork.

“As you know, H1N1 hit the market at a time when hog producers were least able to avoid the shock,” Preugschas told his audience. “There is simply not enough liquidity on Canadian hog farms to manage this latest shock.”

AID APPEAL

The pork council’s recovery plan revives its appeal made earlier this year for roughly $800 million in government aid, which Ot tawa turned down.

Preugschas said CPC still favours hard cash but would consider special loans and adjustments to the Advance Payments Program emergency cash advances.

The third element of the pork council’s recovery plan involves financial assistance for producers in leaving the industry.

That could involve another sow cull similar to a $50 million breeding swine cull program announced by Ottawa in February 2008. But this one would have to be much more extensive because of the “extreme losses that have occurred on farms over the past 33 months,” Preugschas said.

He later painted an alarming picture of the hog industry, warning it could lose half its output unless Ottawa comes through with an assistance package within the next six weeks. That would be equal to the amount of pork Canada exports, he said.

AGENDA

Troubles in the hog industry are expected to be on the agenda of the federal-provincial agriculture ministers’ meeting in Niagara-on-the-Lake, Ontario July 9-10.

The meet ing also heard that Manitoba hog producers will receive an estimated $37.7 million in targeted advance payments (TAP) from AgriStability.

The money is a percentage of payments farmers can expect to receive from the program for the 2009 program year.

But few producers qualify for advances because they have no financial margins left to base AgriStability payments on, said Karl Kynoch, Manitoba Pork Council chairman. “That’s going to help only a very small percentage of producers.”

This will be the third straight year of TAP payments for Manitoba hog farmers. In 2007, 491 producers were paid just over $51 million. Last year, 314 producers received $32.6 million.

Andrew Dickson, Manitoba Pork Council general manager, wondered how much of that money stayed in producers’ pockets. He said a number of producers had payments clawed back because the advances exceeded what they actually qualified for.

The council has twice asked the provincial government for a hog assistance package similar to a recent one in Saskatchewan which pays $20 per market hog and $10 per weanling.

But Manitoba Agriculture, Food and Rural Initiatives Minister Rosann Wowchuk said the province will not initiate a program which could be trade actionable.

“We have to work through existing programs and there’s money available,” Wowchuk said. [email protected]

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