No one doubts the severity of the cash crunch burdening the current generation of hog producers in Manitoba. Watching one’s equity erode with each hog sold is not something we’d wish on anyone.
Barns are being depopulated and producers are shutting the door. These investments were made in good faith, and while any investment is a risk, these were taken after a great deal of industry and government cheerleading. Governments are now eerily quiet when it comes to special attention to the hog industry.
Assuming much of Manitoba’s massive hog infrastructure remains in a productive state, now is as good a time as any to map out a plan for the future that builds some balance and resiliency into the sector.
It starts by recognizing that the so-called “perfect storm” of events that has converged on the industry has been brewing for a long time. The industry’s structure is such that many participants seemed to have no option but to continue sailing into it – with an outcome bearing an ominous resemblance to the movie that goes by the same name. Even as margins were squeezed continuously tighter, and markets became ever more tenuous with the impending imposition of country-of-origin labelling (COOL), the barns in this province continued to pump out the pigs.
Why? Aside from blind faith that this would all blow over, producers needed cash flow in order to service their debts. Even selling at a loss was better than not selling at all. Not a bad approach for a short-term downturn, but the bad news just kept coming.
COOL, a stronger Canadian dollar, and new environmental regulations have vastly changed the operating environment and industry’s cost structure. Industry and government encouraged the development of the industry based on the notion that Manitoba would be the cheapest place to buy feed. That assumed the mythical combination of an end to U. S. corn and soy subsidies, and development of fusarium-free, high-yielding wheat. Wonderful in theory, but it hasn’t happened.
Any value chain that stakes its profitability on buying inputs for below their true costs of production is doomed. And if the pundits are correct in their predictions that energy and water will become increasingly scarce, those impacts will overshadow feed costs in the production model currently favoured by industry.
Finally, the industry needs to pick public relations battles it can win. Whether it’s odour, animal welfare or what to call the latest pandemic, the pork industry’s approach has been to deny the legitimacy of dissenters.
For example, it is well known that hogs have traditionally been a global reservoir for H1N1 influenzas – of which there are several types. While the origins of the current one remain unknown, according to the U. S. Centres for Disease Control, it contains two genes from viruses that normally circulate in pigs in Europe and Asia and plus one gene each from birds and humans. Trying to convince the press it is wrong to call this a “swine flu” is like arguing over how blue the sky is.
Not only that, but it provided government with a convenient red herring. The pork producers asked the federal government for $800 million last week. What did they get? An opinion piece from the federal agriculture minister instructing the media not to say swine flu. There. He helped.
That’s not to say there hasn’t been significant support for the sector. Public Accounts of Canada lists all government payments to farmers over $100,000. For 2007-08, 57 Manitoba hog farms in that category received $16,284,086 for an average of $285,686. Advance AgriStability payments for three years running have averaged more than $100,000 per producer.
A far better approach would be to take a hard look at what this industry must do to win over not only consumers, but rural neighbours and Canadian taxpayers. This entails asking them what they want, not telling why they should buy what you have.
None of this is easy. But it can be done. And it can’t be worse than what’s happening to the industry right now.
Take a look at what’s happening in the U. K. where producers’ hard times included most of what Canadian producers are experiencing, plus a devastating foot-and-mouth outbreak (see “Peet on Pigs” in the June 18 issue).
The video “Stand by your ham” found at www.pigsareworthit.com/video.htmlis just the topper on an industry that has completely reoriented itself around the themes of social and environmental palatability – as well as producing a high-quality product that tastes good. The jury is still out, but it appears the British public is prepared to pay what it takes for a domestically produced product it can trust.
In short, this industry needs to stop listening to rhetoric – much of which came from those not putting up the money, go back to the drawing board and come up with a strategy that looks beyond where to put the next barn. [email protected]