Canada’s financially beleaguered mink producers received a bit of good news last week when the federal government extended the deadline for repaying their 2013 cash advances.
Producers now have until June 1, 2015 to repay their Advance Payment Program (APP) cash advances instead of September 30, 2014.
The move provides some relief for producers who have seen a precipitous drop in mink fur prices since the start of the year.
“Within the current marketing season we’ve seen prices decline anywhere from 65 to 70 per cent,” said Donald Boyd, a mink rancher at Sanford.
Boyd said sales and prices collapsed this winter when China, which buys 80 per cent of the world’s farmed fur, experienced an unexpectedly mild winter and saw a drop in its retail fur sales as a result. Previously, the demand for mink fur had been strong and prices were at near-record levels. This prompted the industry to expand, especially in Europe.
“Going into the current selling season last fall, everything looked good. So everybody kept more mink around the world,” said Boyd, a director and former president of the Canada Mink Breeders Association.
Now, following the Chinese market crash, carry-over stocks are high and it’ll take several years for them to come down and prices to recover, producers say.
“When you’re relying on one country like China to buy 80 per cent of the fur and it has a hiccup, it’s huge,” said Kerry Baldwin, a Starbuck mink rancher.
“It’s going to take two to three years to get rid of this glut.”
Baldwin, whose farm has been in the family for generations, said there were 60 million to 65 million mink pelts on the world market two years ago. This year, according to industry estimates, there are 80 million to 90 million unsold pelts and could be as many as 90 million to 100 million next year.
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Mink are bred once a year during late February or early March. Females give birth to kits from late April to early May. Kits are weaned in June and the fur is harvested in November or December after it is fully developed.
Boyd said average pelt prices last year were close to $100, depending on the breed and colour. Currently, they are running as low as $30 a pelt.
Boyd said some producers in Nova Scotia, a major centre for mink farming in Canada, are talking about euthanizing kits because they don’t have enough cash flow to feed them through to pelting.
“I think that, if these current price levels stick, you’ll see producers getting out. Very few commodities see a 70 per cent price drop within one selling season.”
Nova Scotia producers’ problems are compounded by a severe outbreak of Aleutian disease, a highly contagious parvovirus in mink. Baldwin said the outbreak has forced producers to switch from higher-value black mink, which are highly susceptible to the disease, to lower-value brown mink, which have some resistance to it. This increases the volumes of cheaper fur on the market and further depresses prices.
Ironically, the notoriously volatile mink industry appeared to be on the upswing before the present crash. According to Statistics Canada, the country had 233 mink farms in 2012, up from 224 in 2008. Farm cash receipts from sales of mink and fox fur totalled nearly $248 million in 2013, compared to $92 million in 2008.
Manitoba currently has nine mink farms, down from 10 in 2011 and 12 in 2001.
In addition to financial problems, the mink industry faces pressure from animal welfare people, who oppose fur farming because it involves confinement rearing in cages.
Last year the Dutch Senate passed a ban on mink farming in the Netherlands, the world’s third-largest producer of the animal fur. The move, later overturned by the courts, would have phased out the industry by 2024.
Boyd said Canada’s mink producers also feel pressure from the animal welfare movement, despite following a voluntary industry code of practice. But it’s “not the deciding factor” for the industry’s current state.
Despite current problems, Boyd is confident his industry will pull through.
“I think, as a rule of thumb, that most people will weather the storm. You see that in agriculture all the time,” he said.
“There are some who will need that extra assistance (from APP). But for everyone who needs that assistance, there’s two or three who don’t.”
Mink producers are the second commodity group to have their APP repayment deadlines extended this year. On July 10, Ottawa announced a six-month Stay of Default on the repayment of 2013 cash advances for western Canadian grain and oilseed producers who have been unable to sell their crops because of rail transportation delays. The new repayment deadline is March 31, 2015.
Extending APP deadlines, while uncommon, is not unprecedented. In 2008, Canada’s hog producers got their repayment deadlines deferred because of a financial crisis resulting from low prices and export problems. The deadlines were subsequently extended for several years.