Pork council seeks federal help

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This article was published 23/04/2020 (2022 days ago), so information in it may no longer be current.

Manitoba hog producers have been brought to their knees by the COVID-19 crisis, suffering from rapid and deep price cuts brought on by processing plant closures because of worker infections that are causing severe bottlenecks.

It is to the point where some have had to face the unthinkable and euthanize herds.

The Canadian Pork Council made a public plea for government support on Thursday, claiming that the industry is on pace to lose about $675 million this year.

Prices have fallen by 30 per cent and more for full grown pigs — between $30 and $50 a head — and have almost collapsed completely for baby pigs (called isoweans) that are exported to U.S. farms for finishing. Those producers are literally being forced to give them away.

“COVID-19 has pushed the pork sector into a free fall,” said Rick Bergmann, a Manitoba producer and the national chair of the Canadian Pork Council. “It has quickly put farmers into a negative cash flow position.”

The industry is asking the federal government for immediate support to the tune of about $20 per head.

Industry officials met with federal agriculture minister Marie-Claude Bibeau earlier this week and were set to give a presentation to the standing committee on finance late on Thursday.

“It is going to get real,” Bergmann said.

In an email exchange with the Free Press, Bibeau said she cares “deeply” about the well-being of hog producers across the country. She said the government is “examining all options… to keep high-quality and affordable Canadian meat products available to Canadians.”

The industry has been struck by a convergence of issues that has created the unusual scenario where producer prices have declined — the price farmers get when they sell their pigs to the slaughterhouse — but prices consumers pay are going up.

The culling highlights the disconnect that’s occurring as the coronavirus pandemic sickens workers trying to churn out food supplies just as panicked shoppers seek to stock up on meat. Wholesale pork prices in the U.S. have surged in the past week.

Hogs are the latest commodity that’s seeing supplies potentially go to waste as farmers in the U.S. and Canada lose money, with nowhere to sell their animals. Dairy farmers are spilling milk that can’t be sold to processors, broiler operations have been breaking eggs to reduce supplies and some fruit and vegetables are rotting in fields amid labour and distribution disruptions.

In the U.S., at least eight major meat facilities have seen halts in the space of a few weeks, shuttering more than 15 per cent of the nation’s pork processing capacity. In Canada, Olymel’s plant in Yamachiche, Que., which normally processes 28,000 hogs a week, closed for two weeks on March 29 and is currently operating with one less shift.

Those temporary closures of large pork processing plants in Quebec, Iowa, Minnesota, South Dakota and Indiana because of large scale COVID-19 infections among workers has caused massive bottlenecks in the system.

In Quebec, about 92,000 animals are waiting to be sent to the processors, which means farmers have to bear the costs of feeding them longer than they anticipated. In eastern Canada at least one farmer was forced to kill a number of full grown pigs because there was no slaughterhouse that could take them.

Bergmann runs an operation that sells 25-day old isoweans to U.S. producers who then raise them to slaughterhouse size. Typically he would sell them for $45-to-$55 a head.

Last week he sold a batch for $4.70 and then had to pay $3 per head for shipping.

“This week someone said they would take them off my hands for nothing,’ Bergmann said.

With packing plants closing, demand was getting hit for hogs already fattened up for slaughter, and for piglets that would typically replace those animals on the farm. Prices for 40-pound feeder pigs in the U.S. plunged to the lowest since August 2018, according to U.S. Department of Agriculture data.

In Minnesota, there have been isolated cases of farmers destroying fully grown hogs, said David Preisler, chief executive officer at the Minnesota Pork Producers Association.

“Farmers are starting to run out of options with what to do with market-ready pigs,” he said by telephone. “There are other pigs that have been born that need to get into that barn space.”

Hog farmers don’t have the facilities to hold the animals, and when they grow too large to be handled by packers, growers don’t have much choice, said Steve Meyer, an economist at consultant Kerns & Associates.

At the same time, with the almost total shutdown of the food service industry, a large portion of demand has been taken out of the system.

As much as 70 per cent of the bacon produced in the U.S. goes to restaurants and institutional kitchens.

But you would think with the loss of that market it would mean lower price for consumers in the grocery stores. But that’s not what is happening.

Munther Zeid, the owner of Food Fare grocery stores in Winnipeg, said his supplier raised pork prices about a week and a half ago and has been warned there might be another increase.

“We have already been told that depending on how people react to the beef news of the last couple of days (an Alberta processing plant has been temporarily closed) we might expect another increase next week,” Zeid said. “It is day-to-day. We never know what is happening.”

Panic buying reduced supply a couple of weeks ago and now that processing has been disrupted it has caused retail prices to rise again.

Andrew Dickson, general manager of Manitoba Pork, the organization that represents the 300 hog producers in the province said, such the backlogs won’t be cleared up until the virus crisis lets the restaurant and bars open again.

“The only good thing is that the export market doing well,” he said. “Sales are up in Japan and China and Taiwan and South Korea.”

Manitoba is one of the largest hog producers in the country, at just under five million and another 2.7 million baby pigs that are exported live to the U.S.

The two processing plants in the province — Maple Leaf Foods in Brandon and Hylife in Neepawa — process about 100,000 pigs per week.

Janet Riley, a senior spokeswoman at Maple Leaf Foods headquarters, said its current operating capacity has not been impacted by COVID.

“Our early and aggressive COVID preparedness and ongoing diligence along with strong actions taken provincially have allowed us to maintain our processing capacity,” she said.

martin.cash@freepress.mb.ca

— with files from Bloomberg