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Federal buyout gives 74 pork producers $10.5 million to leave

Tuesday, November 10, 2009

by BETTER FARMING STAFF

The need to clarify information continues to plague the $75 million federal hog buyout, pushing back deadlines for tender auctions and provoking a flurry of calls from frustrated producers, says a representative of the organization administering the program.

Gary Stordy, a spokesman for the Canadian Pork Council, says the organization has received more than 800 phone calls since the program began from producers wanting more information.

The Council has delayed the next tender auction to Dec. 9 from its original date, Nov. 24, to extend the registration review period. The first auction, Nov. 4, was pushed back a week for the same reason.

Missing information on applications or the need for clarification - “That’s been some of the hiccups through the process initially,” says Stordy, explaining the need to clarify created a backlog. The Council is reviewing registrations sent after Oct. 23 for the Dec. 9 tender auction.

The Council is “attempting to work through the applications and certainly trying to get as much information as possible out and available in a timely manner,” he says.

Last week, it awarded 74 bids out of 261 more than $10.5 million to take barns out of hog production for three years. About 290 producers registered but not all registrants chose to bid, Stordy says, explaining the difference between the number of registrants and bids.

Registrants do not need to go through the registration process again; they will receive another bid form for the next auction, he adds.

Winning bids receive payment after the producers’ facilities are emptied and a review is conducted.

Bids in the Nov. 4 auction averaged $765.52 per animal unit equivalent and ranged $300-$997 per equivalent. Because different types of hog operations are eligible for the buyout, the Council developed a formula to create a common denominator, Stordy explains. The equivalent is roughly the same as one animal in a farrow to finish operation, although not specifically a sow or weanling, he says.

Data about the provincial breakdown of bid recipients is not yet available. Stordy says the Council is still compiling that data.

He says the program’s management committee planned to allocate $10 million during the first auction. No goal has been sent for how much money will be released in the next round, although he anticipates it will be at least $10 million.

Stordy says there was a lot of confusion within the industry about how much would be spent although the amount was publicly available. Many thought that the first auction would disperse the entire $37.5 million the federal government has made available until March 31, 2010.

“That, frankly, if we look at it across Canada, probably put a significant amount of stress on producers when they assumed that,” he says, and notes that at the time of the auction, there were still few details available about a federal loan guarantee program intended to help producers deal with short-term cash flow pressures.

The Council encourages producers to consider the loan program. Farm Credit Canada, the Bank of Montreal, the Bank of Nova Scotia, Royal Bank of Canada, Libro Credit Union, Austin Credit Union and Rosenort Credit Union have all agreed to participate and the Canadian Imperial Bank of Commerce is “in the works,” Stordy says. BF

 

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