Better Pork - February 2007
Second Look
The pork industry enters a new era
Whatever route that the industry takes in the future will require excellent management skills, data tracking systems and mental fortitude
by RICHARD SMELSKIIn his poem "The Road Not Taken," Robert Frost wrote:
"Two roads diverged in a yellow wood...
I took the one less travelled by,
And that has made all the difference."
Pork producers are venturing into a similar "less travelled road." Indeed, the Ontario pork industry is entering an era of uncharted events. The industry drivers are no longer domestic but international. Local production efficiencies are only a prerequisite to competing in this new era. The new market demands an informed value chain that would allow consumers obtain any information they wish from the birth of the piglet to market and beyond. Buyers could learn how the pig was raised, the safety precautions used, as well as the nutrition, through a bar code at the grocery store. The new market also dictates the need to abide by trade laws, and social and environmental verification. Boardroom decisions can have a bigger impact on our future than many of our own production decisions. The marketplace is getting bigger and moving faster.
No longer can producers afford an adversarial relationship among different sectors in the value chain. For example, if an export market requests barley-fed Berkshire pigs, it means pure Berkshire pigs fed barley, even though "we know better."
Similarly, the industry is requiring a paper trail that can be audited. Large production systems are already managed by data systems, a far superior method than our simple production and audit records. Integrated pig loops can do a quick what-if analysis to determine their competitive advantages and insist on change. Decisions are quick and results-oriented.
Producer organizations are slow to change and study things in detail, causing a very slow response. Meanwhile, the large production systems make quick and timely decisions on their plans and actions. Being quick in reacting to a situation is a definite competitive advantage.
An integrated data system will be the key tool that gives a production stream a competitive advantage. For years, the service industry tried to sell a production record-keeping system to producers, and many producers reluctantly bought a minimum system. Meanwhile, our competition has progressed from production records to data management systems.
Very few Ontario producers integrate production and financial records. The real need is an integrated model of the entire Ontario value chain, where "what-ifs" can be determined and risks minimized. This model should account for trade-offs between all sectors in the chain with a consumer advantage at the end. And there will be risk. The international market is a different market where one is at the mercy of the whims of the nation. This risk is going to be a bigger cost of doing business.
Then there are some silent factors that affect the market place. Welfare movements are silent, often precipitated by do-gooders oblivious to cost and blinded by a cause. The European Union’s animal welfare regulations are often used as a benchmark and easily win consumer endorsement around the world. Similarly, environmental issues are often a result of a perception of future risk that cannot be verified but result in more regulations.
We often think that the economic wealth created by the pig industry can win us political support. Ontario Pork claims that our pork industry adds more than $500 million to the provincial economy. The nation's gross domestic product is $1.08 trillion, of which agriculture provides 2.2 per cent, thus the Ontario swine industry occupies a miniscule position in the global realm, where the figures are in billions. For example, the Iraq war costs $1 billion per day, and the 2002 U.S. farm bill is $99 billion over six years for commodities.
At the 2006 Banff Swine Conference, Edmonton-based management consultant Jerry Bouma, with the firm of Toma & Bouma suggested three future options for the Canadian pig industry. One, that it should be integrated, like the U.S. industry. Two, that it should be co-operative, like the European system. Or, three, that it focus on small niche markets.
Regardless, each will demand excellent management skills, data tracking systems and mental fortitude. BF
Richard Smelski served as general manager of Ontario Swine Improvement Inc. and was a former Ontario government swine specialist.
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