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Bruised hog industry to hold crisis meeting

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For an industry on the brink of collapse, hog producers were surprisingly civilized at the Manitoba Pork Council annual general meeting on Wednesday.

Members were civil, articulate, passionate and thoughtful.

But that sort of attitude, along with $1.50, will get them a cup of coffee and not much more.

It sure hasn't got them any support from the provincial government.

The province recently turned down an industry-led initiative that would have required a government guarantee for a $75-million loan sourced elsewhere. Those funds would have been used for short-term financing of producers' current losses. The idea was that it would have been paid off through a mandatory check-off program.

"If the government ever had to pay out the $75 million it would have a much bigger problem than that," said Karl Kynoch, chairman of Manitoba Pork Council. "That would mean the whole industry had collapsed."

That has not yet happened and that's what the couple of hundred producers were making plans to forestall in a downtown hotel ballroom Wednesday.

Among other things, council members voted unanimously to organize an emergency meeting with all stakeholders -- including processors and retailers -- to find a long-term solution to the crisis.

Producers want structural, long-term change.

Calvin Penner, the owner of a family farm near Argyle that has been in business since the '70s producing about 10,000 pigs per year, is advocating the emergency coalition to address the crisis.

"A lot of the producers are getting near the tipping point," Penner said. "They are not necessarily going broke but they are saying, do I want to burn up all my equity continuing to do this if there is no hope on the horizon? If we start to have people decide they are going to quit in a year or two or three down the road, it has a cascading effect all the way down."

Perry Mohr, executive director of HAMS (Hog Administrative Marketing Services), the successor to Manitoba Pork Marketing, said 47 producers from his group left, or are in the process of leaving, the market -- 25 per cent of its members -- and he said they expect to lose another 25 to 30 producers this year.

At the start of last summer, hog producers were hopeful for a moderately good year but then the enormity of the corn belt drought became apparent by mid-summer and feed prices skyrocketed, meaning producers lost $30 a pig.

Irrespective of the price cycle, Canadian hog producers have been scuffling since 2008 when the U.S. unilaterally introduced mandatory country of origin labeling (COOL), creating a systematic aversion to Canadian hogs in the American market.

The World Trade Organization has ordered the U.S. to bring the legislation into compliance with its WTO obligations by May 23 but the American response so far is that it will carry on regardless.

"(Canada) will ask the WTO tribunal to make a ruling as to whether the Americans are in compliance or not, and we feel strongly they are not," said Andrew Dickson, executive director of the MPC.

Now, the talk is about what retaliatory measures Canada will take.

But regardless of what form that takes, it's not going to replace the $2 billion in losses the Canadian hog industry says it has suffered since 2008.

"Every producer in the province was suffering severe losses (by the end of the summer)," said Dickson. "There is simply no way you can feed animals with something else. Those costs are now in the system and there is no relief until a new crop is harvested this summer."

Feed costs are starting to come down this year in the expectation there is going to be a good corn crop in the U.S.

Realizing the obvious push-back that would ensue were they to come right out and say it, what producers need is for processors -- and consumers -- to start paying more for their pork products.

"Producers are saying let's get together with processors and retailers," said Dickson. "We need to create some sort of remuneration at a level where our producers can actually continue to produce product for them."

No one would accuse the hog-production industry of being sexy. But can the province afford to abandon an industry that's worth close to $1 billion annually?

Republished from the Winnipeg Free Press print edition April 11, 2013 B4

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