“I think that beef and pork are at risk in this country.”
– LAURENT PELLERIN, CFA
Canada’s beleaguered livestock producers could go the way of the fishing industry unless Ottawa moves quickly to save it, warns the Canadian Federation of Agriculture’s president.
The hog and cattle sectors may end up looking like the collapsed East and West Coast fisheries without emergency government action, Laurent Pellerin said last week.
Speaking to the Keystone Agricultural Producers annual meeting, Pellerin said farmers must pull together to avoid the fate of Canada’s fishing, forest and milling industries, all shadows of their former selves.
Later, Pellerin insisted he wasn’t exaggerating about the seriousness of the situation.
“Frankly, I think that beef and pork are at risk in this country,” he said.
Pellerin said he has never before seen the pork sector in such bad shape in 40 years as a hog farmer in his native Quebec.
Producers have culled herds, emptied barns and exited the industry due to a combination of low prices, high costs, U. S. trade barriers and crushing debt loads.
Pellerin sharply criticized a federal program announced last August to help financially troubled pork producers.
Ottawa is spending $75 million for producers to idle their barns for at least three years to lower production and help stabilize market prices.
The Canadian Pork Council, which administers the program, recently held the third of four tenders for producers bidding to exit the industry. The final tender is scheduled for March 10.
Pellerin said bid prices are too low and the program will affect only one to two per cent of the nation’s pig herd – insignificant when Canada has already lost 20 per cent of its pork production over the last 18 months.
He also called a federally backed loan guarantee program inadequate. Ottawa is putting up $400 million as security to encourage banks to restructure producers’ long-term debt loads.
“It’s not a success for sure. I cannot say it’s a failure. I just think that it’s not matching the needs of the actual situation.”
Pellerin said he warned last fall the loan program didn’t meet farmers’ needs and they would soon be back for further assistance.
He said Ottawa must improve the program by either increasing the guarantee rate, waiving interest rates or changing risk management programs to counter the effects of negative financial margins.
After that, the government needs to develop a long-term strategy to ensure the survival of the industry, he said.
CFA is working on a proposal which would include financial aid based on producers’ production costs instead of simply market prices.
Pellerin said the industry cannot afford to rationalize too much because the world’s growing population still needs food.
“If we cut production too much now, where will we be when good times return?” [email protected]