Second Look: It's time for the pork industry to come together

Thursday, October 1, 2009

The industry must change to be sustainable, says the chair of Ontario Pork. And, with governments coming on side, it must speak with a more united voice 

by WILMA JEFFRAY

The underlying economic fundamentals of the pork industry have changed long-term.  
The Canadian dollar will remain high against its American counterpart because of the massive borrowings undertaken by the U.S. Treasury, along with Canada's status as an oil-producing country. At present, the Canadian dollar is strong and producers here are suffering markedly more than U.S. producers have for over three years. The surviving industry must be prepared to deal with this reality.

In the years after the 1998 crash, the level of the Canadian dollar allowed the industry to continue to expand, while the U.S. industry was suffering. This helped spawn the 2004 trade action. Now the reverse scenario exists.

North American sow numbers must decline to provide profitable returns for hog producers. This is a simple statement to make, but unfortunately only achievable through financial attrition. This is today's reality.

Global currency markets, grain markets and pork demand all affect what happens on each pork farm in Ontario. Like it or not, what happens in Brazil, Denmark or the United States has an impact on the business plan of every Ontario Pork producer and processor.

In the context of this challenging reality each of us must ask ourselves the question: where does my operation go from here?

The federal government recently announced two components of direct interest to producers – the Long-Term Loan program and the Hog Transition Plan. After considering the tools provided in the federal package, producers must decide whether to continue in hog production in some capacity or to exit the industry completely. These are difficult decisions but necessary to achieve individual best outcomes.

The underlying fundamental economic factors of the industry have changed. This dictates that the industry must also change to be sustainable. Ontario Pork has been clear in saying that we would lobby the federal government hard and remain united with the Canadian Pork Council and other provinces to achieve the best possible way to address liquidity for producers.

While actively lobbying the federal government, Ontario Pork has also engaged the provincial government about their role in partnering with the industry for the rebuilding phase.

A long-term sustainable strategy which supports the Ontario industry over a stronger competitive base needs to be founded on the strengths of the industry as well as on economic realities. This will require a shift from competition based solely on cost of production toward enhancing the Ontario value chain so we become a more value-based industry.

There is no denying that change takes time, but if it never starts down that path, the industry will continue to flounder. It is time to start this journey with passion.

Ontario must distinguish its product in both domestic and global markets to drive value into the chain for all participants. To achieve this outcome will require partnership between industry and government. Ontario Pork has the provincial government on side, but the will for change remains for the industry to demonstrate.

The past months/years have been intolerably stressful for all. Dreams and plans have been irrevocably changed by forces outside our control. In the process, there have been many damaged relationships and perhaps regrettable interactions. There have been many calls for actions, sometimes in opposing directions.  In this circumstance it is difficult for government to discern a clear voice from our sector.

As an industry we are at a crossroads. Discussion and cross-pollination of ideas create a positive, enriched environment for progress. It does not mean all have to agree.

However, there must be some sense of acceptance of leadership by industry to make the goal achievable.

It is time to come together. BP

Wilma Jeffray is chairwoman of Ontario Pork.