The provincial government has refused to back a hog stabilization program proposed by the Manitoba Pork Council to help producers through ongoing financial turbulence.
“While the province continues to work with the Manitoba Pork Council on possible solutions, their recent proposal is too much of a financial risk during these uncertain economic times,” the minister said in an emailed statement.
“With another flood on the way, any request for support above the programs already offered must be critically reviewed.”
Pork Council chairman Karl Kynoch said the decision is disappointing and he anticipates more hog producers will exit the pork industry as a result. The Manitoba Pork Council first pitched the stabilization program to the government last winter.
“Our numbers have been dropping so fast, some producers have been closing down, but then there are also producers who have been losing their independence,” said Kynoch. “Those producers can’t operate anymore, they’re out of money to continue owing the pigs and feeding them, so the packing plants have in turn been forced to actually take ownership of the pigs and then the producers basically become contract feeders.”
The now-rejected program would have seen the province act as a guarantor for cash loans provided by financial institutions and administered by Manitoba Pork Council Corporation.
Kynoch said the province wouldn’t have had to pay out any funds unless a sizable number of operations went bankrupt, defaulting on their loans.
The loans were to be repaid by a mandatory $5 levy applied to all hogs sold in the province.
The chairman said the council had gone through nearly a dozen options before presenting this plan to the government. The proposal was also assessed by an accounting firm for viability before government was approached.
“Basically at the end of the day, this is what we came up with, so I don’t know where we will go from here,” said Kynoch.
The need for another stabilization plan came after feed corn prices skyrocketed last year before the industry had recovered from a 2009 collapse due to H1N1 concerns and country-of-origin labelling.
Kostyshyn said producers have to use AgriStability and AgriInvest to deal with market fluctuations.
“Hog producers have benefited from these programs since they were first introduced under Growing Forward and they will continue to benefit from them under Growing Forward 2,” said Kostyshyn. “Despite what some in the industry say, these programs have already provided hundreds of millions of dollars in support to the industry.”
Kostyshyn indicated the province has also assisted the pork industry by supporting upgraded waste-water treatment facilities in Brandon and Neepawa to help with the expansion of the Maple Leaf and HyLife hog-processing facilities.
“We all know the hog industry has had a tough time recently — high feed prices and country-of-origin labelling are having an impact. That is why, in partnership with the federal government, we have put programs in place that help the farm industry, including hog producers,” he said, adding Manitoba will continue raising the issue of COOL with American counterparts.
Pork producers might also be driven out of business due to increasing pressure on production practices, the Canadian Pork Council said last week.
“Hog farmers are working hard every day to provide Canadian consumers with a nutritious, safe and affordable food supply,” said Jean-Guy Vincent, chairman of the Canadian Pork Council. “At the same time, we have seen recent announcements by food-service operations and grocery stores outlining new purchasing and sourcing requirements that will have repercussions at a farm level.”
A growing number of major customers in the food-processing and food-service industry — most recently Tim Hortons and Olymel — have announced they want their pork suppliers to stop using sow gestation crates. The Manitoba council estimates that will cost producers $600 per sow to move to group-housing systems.
“These forced changes on Canadian pork producers may end up putting farms that have been passed down from generation to generation in many parts of rural Canada out of business,” the Canadian Pork Council says in a release. “Producers’ livelihoods depend on the viability of the farm and they have concerns about the lack of discussions on the economic implications for farmers of these demands.”
Vincent said the entire value chain needs to share in the cost of making such adjustments. “Any decision to substantially change production practices, and particularly those that require considerable infrastructure changes and significant investment, need full value-chain support.”