Cutting sow numbers part of federal plan to help red meat producers: UPDATE

Thursday, February 28, 2008

by MARY BAXTER

The operation’s performance had been going downhill for more than two years. Using equity built up to “finance losses on a pig” just wasn’t making good business sense. “We drew our own line in the sand and said we are leaving this business and we will reenter this business when the fundamentals make sense,” he says.

Anwender’s resolve to wind down operations wasn’t swayed by federal announcements this month that offered better terms on government loans and a sow cull program.

Announced Monday in Ottawa by Ag Minister Gerry Ritz, the measures include:

* Changes to a federal advance payments program making it easier for livestock producers to qualify for emergency loans;
* Raising the limits on these loans to $400,000 from $25,000, and extending the period before repayment begins to a year from six months;
* Introducing a $50 million sow cull program to be administered by the Canadian Pork Council;
* Reviewing meat inspection; and
* Reducing costs under the Canadian enhanced feed ban.

Clare Schlegel, president of the Canadian Pork Council, said the measures would give producers “breathing room” while they figure out how best to adjust to market conditions.

Hugh Lynch-Staunton, president of the Canadian Cattlemen’s Association says the cash advance program improvements will provide “the liquidity for individuals to make more sensible decisions than they would have to do in a forced situation.”

Loans might help in the short, but when it comes right down to it they’re loans, not cash, Anwender says. They don’t address hog producers’underlying problem: several challenges within their market in recent years that have eroded equity and they now face losses he predicts to be between $35 and $40 per animal in 2008.

Moreover, while the sow cull program may be of benefit for those thinking of exiting the sow business permanently, it’s not so great for those who may want to return to the industry when the marketplace improves, or who might want to get of lingering diseases by depopulating their herd, he says. The program’s conditions — producers must empty at least one barn and not restock it for three years — are what cause the problem.

Cameron McLean, president of the Kent Pork Producers, is also feeling the impact of a soaring loonie, escalating feed costs and plummeting hog prices. The 200-sow weaner operator, and 25-year veteran of the industry, questions the effectiveness of the aid.

He’d also like to see measures in place to combat the effects of ethanol on livestock production: increasing grains and oilseed costs and reduced availability of these for feed.

As well, producers continue to face the daunting challenge of competing not only with hog producers from elsewhere but also producers of other meat products, he says.

Ritz said the goal was to have the money flowing by March. BF