Hog farmers are reacting cautiously to a government aid package that promises to help their struggling industry but is short on detail.
The three-pronged program includes strategies for producers to leave the industry, long-term government-guaranteed loans to help others continue, and a market development program for pork exports.
Producers wonder exactly how the program will work for them.
“The devil’s in the detail and we don’t know the detail,” said Herm Martens of Morris. “The numbers don’t show what will be applicable to my farm.”
The long-awaited program, announced at a news conference outside Winnipeg Aug. 15, capped weeks of anxious waiting by Canada’s financially ravaged pork producers.
The program seeks to strike a balance between keeping viable producers in the business and helping those who are financially stressed leave.
A key element is a $75-million hog farm transition program. Producers who agree to keep their barns empty for at least three years can bid for a negotiated amount to exit the industry.
Amounts are based on a barn’s annual product ion capacity. Producers still must sell their pigs however they can.
The program is slightly different from one last year which paid producers to cull breeding sows and idle their barns for three years. Here, payments are based on size of the operation. There is no set dollar amount per animal.
The reason is that this program covers weanlings and feeders, as well as sows, and settlements will depend
on product ion volumes, Agriculture Minister Gerry Ritz said.
Jurgen Preugschas, Canadian Pork Council chairman, said he believed the transition program is fair.
“We actually think it’ll be a workable situation where people bid in terms of what they think they need to be their transition out of the industry,” said Preugschas, a hog farmer from Mayerthorpe, Alberta.
But some farmers said they need to know up front how much to expect before agreeing to sign up.
“There’s not enough details in the announcement to know exactly what you’re going to get or what the criteria are for your payment,” said John Preun, a Selkirk producer and Mani toba Pork Market ing Co-op chairman.
“They have no idea what they’re going to get, and what one farm gets will be different from what the next farm gets.”
For George Matheson, a producer from Stonewall, the exit strategy contains far too many uncertainties.
“How they’re going to do this case by case, how long that will take, how equitable it’ll be, how everyone will be treated fairly in the end, is beyond me,” said Matheson. “This sounds incredibly complex.”
Karl Kynoch, Manitoba Pork Council chairman, agreed the program is a new concept to feeder and weanling producers who didn’t qualify for last year’s sow cull.
“It’s going to take some time to sort out what you’re prepared to take to shut a barn down,” said Kynoch, a producer from Baldur.
The long-term loan program is also short on details.
Ottawa promises to partially underwrite loans at market rates from lending institutions to producers, although the exact level isn’t known yet.
Loans would first be used to reimburse outstanding emergency cash advances under the Advance Payments Program. The 2008 repayment deadline was extended earlier because many producers couldn’t pay.
The program will encourage banks to continue lending money to hog producers, knowing the government is partly backstopping the loans, said Ritz.
“It’ll give the banks the assurance that they’re not taking on 100 per cent of the risk.”
Ritz downplayed the possibility that the aid package could be trade actionable. He said U. S. Agriculture Secretary Tom Vilsack agreed the program is similar to one given to U. S. pork producers.
Laurent Pellerin, Canadian Federation of Agriculture president, said the program should not cause trade problems because it does not involve direct cash payments to farmers.
“I don’t think there is a trade implication in that type of program,” said Pellerin, a hog farmer from Quebec.
The package also contains $17 million to help boost pork exports abroad.
The federal announcement is far from the $800 million the CPC was seeking earlier to save the industry.
Preugschas said the program will help, but warned the industry is still in deep trouble.
“We do have to recognize that not every farm is going to survive.”[email protected]
stay tuned for details: Federal Agriculture Minister Gerry Ritz announces a federal aid package for Canada’s financially devastated hog farmers.