Behind the Lines - August 2012
Wednesday, August 1, 2012
Why don't more producers use futures contracts to defend their positions when they market pigs? It's a question that we at Better Pork have heard asked any number of times. So this spring, as prices were trending downwards, Senior Staff Editor Don Stoneman set out to learn more. His report starts on page 6.
The answers aren't simple. For some producers, taking a position in the market seems to be scary, a bit like "speculating." For others, it's an issue with their lenders, who may not understand the concepts involved in covering margin calls when prices change rapidly. Unfortunately, most chartered banks were reluctant to talk to us about the matter. Some other lenders on both sides of the border, however, were happy to speak to what is involved in getting producers into hedging. It's a question that will become more important as our neighbours to the south, where our prices are based, become more dependent upon exports to prop up those prices – and also as the provincial government puts a cap on spending from the Risk Management Program (RMP) that former agriculture minister Carol Mitchell signed not even 18 months ago.
Another topic as hot as RMP is sow housing. We tend to regard Europe as a bellwether for animal welfare issues. In this issue, Norman Dunn reports that with a January deadline looming, loose housing is working well in some countries while others are struggling. One key may lie in selecting breeding stock for docility.
In a somewhat related feature, however, Dunn found research showing that the meanest sows may be your most productive. BP
ROBERT IRWIN