Ripple effect feared in hog woes

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Doug Chorney

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Hog-industry advocates are warning that significant losses could ripple through the Manitoba economy without government support following last week's court-appointed restructuring of one of the province's largest operations.

The Manitoba Pork Council has been warning for weeks that Manitoba producers are going to lose about $150 million between now and next April.

On Monday, Doug Chorney, president of Keystone Agricultural Producers, turned up the heat in an effort to get the provincial or federal governments to support hog producers just as they support grain growers.

"(The industry has) an ask for $150 million in bridge financing to help the industry get through the next nine months," said Chorney.

Puratone Corp., the third-largest hog producer in Manitoba and fourth-largest in the country, filed for bankruptcy protection, raising alarm bells about a crisis in the hog-producing industry in Manitoba.

The company succumbed to rising feed prices that started coming up in 2006 and then spiked dramatically this summer as a result of the drought-ravaged United States corn crop.

In addition to Niverville-based Puratone Corp.'s bankruptcy-protection action, Big Sky Farms of Humboldt, Sask., went into receivership last week.

Behind the scenes of the corporate failures, stories are swirling about producers handing in their barn keys to the banks.

Rick Bergmann, vice-chairman of the Manitoba Pork Council, said there have been 28,000 sows sold by Manitoba producers this year, which means producers are exiting the market.

That translates to about 1,000 direct and indirect jobs lost in the province, according to the council.

Leonard Esau, a farmer near Steinbach who has been producing hogs for 30 years, is in the process of emptying his barns and eliminating his risk by becoming a contract producer.

He said under the current conditions, he is losing between $50 and $55 per head on his finishing stock.

"Can the government afford to bail out the industry at $50 per pig?" he asked. "I don't know about that."

Karl Kynoch, chairman of the Manitoba Pork Council, said it has been frustrating trying to get a meeting with Ron Kostyshyn, Manitoba's agriculture minister.

"We have been working on the provincial and federal governments for more than a month," Kynoch said. "There is nothing on the table from either level of government. The feds don't want to consider new programs but instead are trying to revisit old ones that do not work. And there has been no response from the province."

An industry committee has been meeting with federal department people since August, and an interim report was completed Friday.

But a spokesman for the Canadian Pork Council confirmed it has concentrated on finding solutions within existing programs.

Kostyshyn was unavailable Monday.

But a spokeswoman for the minister said in an email, "Manitoba is very concerned with the recent difficulties of the Canadian hog industry. This was discussed last week as ministers and officials from across Canada met in Whitehorse. We are pleased that the federal government has appointed a hog industry task team to monitor the current situation. We will maintain our close contact with the federal government, our provincial partners and the hog industry in the coming weeks. It is important that any actions taken by the industry be consistent with our international trade obligations."

Chorney and others point out that the livestock industry does not have the same kind of guarantees of recovering its costs as the grain industry.

"A crop producer can buy crop insurance and guarantee about 80 per cent of his costs," Chorney said.

"We need a program like that so hog producers can guarantee the cost of production."

He said governments subsidize the cost of grain insurance, so, somehow it could do the same for hogs without violating trade agreements.

Andrew Dickson, the general manager of the Manitoba Pork Council, knows that there are no easy solutions.

"We can't ask for subsidies because it would immediately cause a trade war with the U.S.." he said. "The only way to do it is with a financing package or loan guarantees to ensure producers have sufficient cash to pay for feed, labour and power."

martin.cash@freepress.mb.ca

Republished from the Winnipeg Free Press print edition September 18, 2012 A3