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Transition program cause for optimism for Alberta pork producers
Barb Toker
for Smoky River Express
With the fourth and final tender of the Hog Farm Transition Program (HFTP) now complete, Alberta pork producers are looking at the future with a bit more confidence.
Rene Blanchette of Smoky River Pork said that a reduction in Canadian pork production will aid in strengthening prices and the industry as a whole.
“This will reduce the hog inventory in Canada which for sure will have a positive impact,” Blanchette said.
Through the HFTP, eligible Canadian hog producers were given the opportunity to suspend their operations for a period of three years as a measure to reduce the glut of pork on the North American market. Blanchette said while the program is not for everyone, there are those producers for whom the HFTP makes a lot more sense.
“I think there are those that have been in the industry for a fair amount of time who have seen their margins being cut and there are those Mom and Pop operations who see retirement just ahead and they are saying ‘now is the right time to get out of it’.”
Participating hog farmers were to submit tenders indicating how much funding would be required in order to suspend their production activities. A total of $75 million in federal funds will be distributed to farmer whose tenders have been accepted. Once accepted, producers have up to 12 months (depending on the type of operation) to dispose of their herds. Any monies coming from the sale of hogs are not tied to the HFTP.
Smoky River Pork, a 5,000 sow farrow to wean operation, did not participate in the program choosing rather to ride out the current economic storm and await the hope-for results of the HFTP - improved markets.
“The day will come when the economy turns around and goes back to normal,” Blanchette said. “At that point in time the demand for pork will increase.”
That anticipated increase in demand coupled with the removal of surplus stock is expected to bring prices up. The Canadian Pork Council estimates that about 10 per cent of the current Canadian hog inventory will be removed through the HFTP.
“Production will have eased slightly in Canada, so there’s a brighter day ahead for us.”
Blanchette said programs like the HFTP are a positive response from industry and will address some of the grassroots-level issues impacting pork prices, but he said there are larger issues that producers have no control over.
“Our market is mainly into the United States and we are seeing pork exports to the US increasing over the past few months,” Blanchette says. “Our dollar is going to suppress some of those markets and some of those overseas markets.”
With the loonie hovering at parity with the US greenback, Canadian pork has become more expensive at a time when consumers are particularly price conscious.
“China and Japan are going to go to those other countries where the dollar is lower. I’m quite confident that if we had an 85 cent dollar, China and Japan would be very fullfilling markets.”
Blanchette said even if producers who suspended their operation do come back to the industry, it is unlikely that Canada will again reach the inventories of years past.
“I don’t see us in three years getting back into the production that we had before,” Blanchette said. “The industry hurt for a long time and it’s going to take a long time to build up to those levels that we had a couple of years ago.”
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Smoky River Region pork producer Rene Blanchette.
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