Ahead of the Heard
Much has been written about the downward trend in the livestock business and there appears to be no end in sight. Last week saw Alberta Pork, the hog producers organization, declare an industry crisis with predictions of imminent collapse. They even decided to return some of the hog checkoff money they had already collected back to producers. That’s pretty serious being it doesn’t amount to much per producer but it could wipe out their organizations’ reserves. I suspect this move was designed more to get the Alberta government’s attention than to save any producer from financial ruin.
During the last hog industry crisis the Alberta government coughed up a temporary support program which helped producers stay afloat, although its levels were diluted when (much to the annoyance of hog producers) cattle producers were blackmailed into getting a piece of the handout. The provincial government at the time stated that support program would be the last ad hoc support program for livestock producers. It would seem that hog producers didn’t believe the government with their recent declaration of another hog industry crisis.
Part of the deal with that support program was that the hog industry would go through a rigorous self-examination process with the idea that it would reinvent itself. That was always a dubious proposition being nothing unique seemed possible. That didn’t stop Alberta Pork from going through the motions; consultants were hired, studies commissioned, international market access missions were mounted, marketing magicians were engaged and of course industry roundtable discussions were held across the province. If I recall the conclusion was that pork from Alberta was the best in the world, should be marketed as such and receive the appropriate premium.
As hopeful as that was, that marketing concept is remarkably similar to pork being sold by the USA, Denmark and a number of other pork exporting countries. It seems everyone’s pork is the best and deserves a premium. Pork buyers love that approach by sellers being they just play one off against the other driving the price down. Apparently the Alberta pork premium concept has not quite materialized as hoped for, being the industry is once again in a crisis mode.
Some in the industry blame the crisis on hog buyers, citing that Alberta is traditionally the lowest price market for slaughter hogs in North America. They add that at times Alberta is also one of the highest hog production cost areas on the continent. There would seem to be a message in that reality, especially if it means that producers are forever losing money on every market hog they produce. It would seem clear to those of us observing the hog industry that there is only one solution to stopping the losses and ending the crisis. Well actually there may be two – the obvious first one is to buy out the remaining producers and formally announce that hog production will no longer be supported in anyway by the taxpayers of Alberta -and no more crisis fearmongering. Those that want to stay in the hog business would be doing so completely at their own peril.
Another consideration for the industry to contemplate once and for all is to revisit the marketing board concept. Being some industry stakeholders maintain that low price marketing is the underlying problem, then perhaps the industry needs to look at alternative ways to sell their hogs – and yes that should involve going back to the future. I recall when single-desk marketing was abandoned there was much anticipation that hog production and profitability would thrive in the freedom of the open market. If the recurring hog marketing crisis is any indication maybe the glories of the free market are not quite what proponents had promised. Noting the ongoing loss of producers and hog operations perhaps the market is telling us all what the future of the hog business will really be in Alberta and soon.
I would suggest that Alberta Pork request a substantial grant from the Alberta Meat and Livestock Agency (remember them, they are supposed to save the livestock business in Alberta) to investigate ways and means to reinstate single desk hog marketing in Alberta. Heck they should go all the way and investigate the feasibility of establishing a supply-management hog quota board like the milk and poultry boards. It works very very well for those producers – so why not for hog producers – I would suggest that hog producers have nothing more to lose so why not look at what works – we know from crisis after crisis what doesn’t work.