“You’re bidding the price down to what the lowest will accept.”
– LES MCEWAN
A$75-million program to help Canadian hog farmers exit the industry has ended up removing 800,000 pigs, including 10 per cent of the national sow herd.
The Hog Farm Transition Program eliminated just over 131,000 sows, as well as nearly 250,000 weanling pigs and more than 420,000 market hogs, according to Canadian Pork Council figures.
Canadian farms were home to 1.3 million sows on January 1, 2010, according to Statistics Canada.
The HFTP, administered by CPC, conducted tenders in which producers submitted bids for their animals. Successful bidders agreed to empty their barns for at least three years.
In all, HFTP spent nearly $71.8 million dollars from the four tenders held. The program expects to use up all the $75 million in federal funds budgeted to it once final adjustments are made, said Gary Stordy, a CPC spokesperson.
The program received 1,407 bids, of which 424 were successful. Some bidders who were unsuccessful on their first attempt achieved success in later bids, Stordy said.
Les McEwan wasn’t one of them. The Altamont, Manitoba hog producer failed to get into the first round of tenders and was above accepted bid values in each of the three subsequent tenders.
The final tender was held March 10.
Last week, McEwan said the bid system was flawed, calling it a race to the bottom instead of a proper auction.
“It’s backwards,” he said. “You’re bidding the price down to what the lowest will accept instead of up to what the highest ones are expecting.”
Each tender kept adding more bidders anxious to get out of the industry, driving bids down further, said McEwan.
“Would we put our MPs in office by accepting bids for who would do it the cheapest?”
CPC says the first three tenders each attracted roughly 400 bidders, with 274 submitting bids for the fourth tender.
McEwan, a small producer with only 30 to 40 sows, said the program was further flawed by not giving successful bidders a fair return for their animals. That should include not just market value but also the cost of shutting down facilities, he said.
He suggested many successful bidders were investors who owned pigs but not the barns themselves and will simply walk away.
“If anybody was looking at cleanup costs, they wouldn’t be putting in such low bids.”
But Stordy said the owner of the animals also has to be tied to ownership of the barn because of the requirement to idle the operation for three years.
If a successful bidder does not actually own the facility, CPC will demand the money back, he said.
Stordy said HFTP was intended to catch people who did not qualify for a $400 million federally backed loan guarantee program.
But fewer producers than expected qualified for loans because of difficulty meeting viability tests. So HFTP may have received more bidders than expected, he said. [email protected]