Existing programs may not save pork producers

Friday, October 26, 2012

by BETTER FARMING STAFF

Current federal programs may not be enough to save pork producers during the current market downturn says Canadian Pork Council (CPC) chair Jean-Guy Vincent.

Following a meeting of provincial pork organizations last week, Vincent says it was confirmed that Canada may lose many of its 7,000 hog farmers in the coming year. CPC estimates the loss could range from five to 15 per cent.

"It was clear to me from this meeting that provincial hog producers expect the federal government to adjust existing programs and not put at risk the entire pork value chain complex,” Vincent states in a news release. “The historic drought in the U.S. corn belt this summer resulted in a drastic change in the economic situation facing hog producers.”

Governments are urging producers to use existing programs and while CPC supports this, “we are not confident that the existing federal programs will be adequate to address the current liquidity issues producers have to deal with in the coming months,” he states in the release. “We need short-term actions now to maintain a critical mass of the industry and to continue to make a significant contribution to Canada’s economy.”

Vincent’s comments come on the heels of a federal government news release earlier this week that urged farmers to take advantage of existing business risk management programs. They include AgriStability interim payments, funds currently held in AgriInvest accounts and cash advances available through the Advance Payments Program.

The Agriculture and Agri-Food Canada (AAFC) news release notes that, “hog producers can withdraw from their AgriInvest accounts, which hold over $31 million in producer and government funds, and request an AgriStability interim payment. Governments are working with program administrators to fast-track these requests.”

The news release also says, “governments are working with Advance Payments Program administrators to ensure that applications for cash advances are processed as quickly as possible.

“Since April 2012,” the AAFC news release says, “almost $36 million in cash advances have been issued to hog producers across the country. Hog producers are eligible to apply for guaranteed loans of up to $400,000, based on their animal inventory, with the first $100,000 being interest free.”

AAFC is also “adjusting” the Hog Industry Loan Loss Reserve Program (HILLRP) to help hog producers who already have a loan under the program by allowing lenders “to extend an interest-only payment period.”

To put the prospect of this year’s potential losses in perspective, Statistics Canada shows that as recently as 2006 there were 12,320 pork producers nationwide compared to 7,000 today. In 2006, the total number of pigs on farms in Canada was just over 15 million. In 2011 that number was 11.8 million.

Following the AAFC news release, Ontario Pork issued a statement saying it supports “the process that the CPC undertook with the federal government.” Ontario Pork also says “the outcome was negotiated at a national level for the benefit of all pork producers across Canada and ultimately the uptake of the programs will determine their success.” BF