Producer George Matheson says they need $10 more a hog from processors otherwise only vertical integrators will survive
Manitoba’s independent hog farmers, including the Hutterite Brethren, won’t survive unless Canadian processors boost prices $10 a hog, says George Matheson, a Stonewall hog producer.
“To be quite frank, I think the independent (hog) producer in this country is dying a slow death,” he told the Keystone Agricultural Producers’ General Council meeting Oct. 25.
Matheson, who is also a Manitoba Pork Council director, stressed his comments reflected his own opinion and not necessarily the council’s.
“What I think will happen is (losses) will slowly grind the independent producer in Western Canada to the point of non-existence,” he told reporters later.
Only vertically integrated operations, such as HyLife, which raise and process their own hogs will survive, Matheson said. In the meantime, Maple Leaf in Brandon, which only owns 20 per cent of the hogs it kills, will have to look further afield for its supply or raise more hogs itself. Producers in Saskatchewan and Alberta are going out of business too, he said.
He’s not holding out for government support.
“I think the government is going to look at this industry and say ‘you’ve got to fix yourselves,’” Matheson said. “My solution for that would be the processors and the producers getting together and making sure this value chain works for everyone.”
Farmers are rejecting short-term fixes such as cash advances or new loans because they have enough debt, Matheson said.
He said he was dismayed to hear no long-term solutions presented at the annual Canadian Pork Council meeting and “no effort to think outside the box.”
Matheson suggested slapping a levy on imported U.S. pork, which accounts for 25 per cent of Canadian consumption.
“Maybe we could slow that flow down to allow our own processors to have a little more profitability and hopefully they’d dig into their pockets and pass that on to the producer so that we have a value chain that works,” he said.
He noted the U.S. levies Canadian pork so it should work both ways, Matheson said.
A combination of factors, including the high Canadian dollar, high grain prices, low hog prices and U.S. country-of-origin labelling laws, are why hog producers are losing money.
American producers are losing money too, but not as much, Matheson said.
“They will recover sooner,” he said. “Ultimately we sell to the same markets and it will slowly squeeze us out of business.”
Matheson said when he started producing hogs in 1982 there was more local competition. His hogs were sold through a single-desk marketing board on a Dutch auction.
“The bidders were six small processors on Marion (Street in Winnipeg) and it was a made-in-Manitoba price,” he said. “Because we have such a limit of processors in this country we take the U.S. national price, less the freight to get it down there.”
But is the issue a lack of local competition or that the U.S. has a competitive advantage? Notwithstanding COOL, the North American market is largely integrated with hog and grain prices arbitraging.
Perhaps Manitobans shouldn’t be producing hogs? “Well there are a lot of producers who felt that way and they are out of business,” Matheson said.
Would prohibiting processors from owning hogs and restoring the single desk help? One would think so, Matheson said, but he noted Ontario had single-desk selling until a couple of years ago and far fewer integrators and its producers are struggling too.
Quebec farmers are doing better thanks to a $28-a-pig subsidy program, Matheson said. Since Quebec doesn’t export pork to the United States, the Quebec subsidy hasn’t triggered trade action, he said.
Supply management isn’t an option either, he said. Many pork parts must be exported because they aren’t consumed domestically. Supply managed would increase retail pork prices and consumers would eat beef, Matheson said.
Although Matheson runs a small farrow-to-finish, straw-based hog operation, he is vertically integrated. Since 2005 he has been selling his pork processed at nearby St. Laurent directly to about 200 customers.
“It’s the only reason I’m still producing hogs today,” Matheson said.
“We’re only a half hour drive from downtown Winnipeg.
“It works for us but it won’t work for everyone.”