Is the end in sight for hog producers in Alberta?

It’s a well-worn headline used by many analysts when trying to find some glimmer of hope in a depressed commodity market, but that headline is beginning to have a more ominous meaning in this province. “Is the end in sight for hog producers” has rung true, but not from a more positive market prediction; instead, that end for many hog producers has been a mass exodus from the industry. Statistics indicate that there were around 1300 producers in 2002, today just over 375 are still in business. It’s even worse when you compare that to 25 years ago when there were almost 3,000 hog producers in Alberta.

Granted, years ago hog operations were a lot smaller; a hundred sows was a good sized operation with 500 sows being a big time operation. Today it seems you need a thousand sows to be a player with the large operators having up to 5,000 sows. Such sized operations have slowed the inevitable production loss, but will it be enough before slaughter infrastructure begins to be affected. If the Red Deer Olymel plant can’t get enough hogs, their economies of scale will be imperiled. I suggest that a big reason they are still in business is that they are probably paying the lowest prices for hogs in North America. That may be good business and the realities of the marketplace, but you can’t keep on doing that and expect producers to continue to take the losses and still stay in business.

Alberta Pork, the producers’ organization, has done a valiant job in convincing governments to subsidize both those that want to maintain production and those that want to exit or downsize. The last go-around in Alberta saw the government toss a few million at the economic pain producers were suffering. In exchange, the industry and their organizations were supposed to create a business-type plan to revitalize pork marketing in Alberta. A lot of thought and enthusiasm was thrown into that process including pie-in-the-sky schemes about premiums from niche markets for Alberta pork products. I am not sure of the fate of those plans, perhaps the Alberta Livestock and Meat Agency is still financing those dreams.

There is always the time-tested hope that governments will toss more subsidy money at hog producers in the also time-tested hope that the market will soon recover. That’s worked in the past, but price recovery seems to be taking a very long time to come around this time. It also seems all the AgriHope programs of the federal government have run out for the hog industry after what seems like years and years of losses.

So, what future is there for the hog industry in this province? I would suggest that severe consolidation will continue. However, I would also suggest that the only survivors will be mainly Hutterite colonies and a few large operators, some with immigrant money propping them up. The colonies are the only business operations that have the diversification base and the very long term capitalization ability to stay in the hog business. Their prominent personal participation (almost unheard of just 15 years ago) in the governing board of Alberta Pork (and other commodity organizations) indicates that they are making very serious commitments to the future of pork production. I would further suggest that once the industry has consolidated enough, the next step will be, for the few and the big, to take up an equity position in the Red Deer pork plant, if not buy it outright. It would seem to be the next logical step in the vertical integration of the industry; it’s a typical marketing approach in the U.S. That step may also be needed to prevent the plant from closing. The other option could see governments get involved with loans or guarantees, that’s never a good sign for any industry.

What’s the other alternative? I would be so bold as to suggest that the industry might want to consider the “back to the future approach.” Yes, that would be a marketing board, or rather a new-age marketing board. This approach might take a leap of faith, but think where the total open market approach has brought the hog industry today; that being down to a few hundred producers since the demise of the old marketing board structure. I always thought it was rather curious that the biggest proponents of eliminating marketing boards were packers and processors, perhaps there is a message there.

Granted the hog industry is not the dairy or poultry industry, the dynamics are certainly different, but perhaps there is something to be learned in revisiting the original concept from a different approach, learning from past mistakes maybe but also from past advantages. Having observed the general economic well being of the dairy and poultry industries as probably the most successful and profitable sectors of Canadian agriculture, it does cause one to ponder that maybe supply management isn’t so bad after-all, even in Alberta. Just food for thought.

Just Posted

Alberta Finance Minister says equalization program not working

Equalization formula fails Alberta again, says UCP

Stettler Board of Trade asks, gets $34,000 budget increase from town

Museum gets same funding as previous year, didn’t ask for increase

Donalda’s Curtis Cassidy win’s $26,230 at NFR

Big Valley’s Zeke Thurston bucked off

World Champion Saddle Bronc rider, Zeke Thurston of Big Valley consistent at NFR

Donalda’s Curtis Cassidy third overall and wins $15,653

Local cowboys Zeke Thurston and Curtis Cassidy have solid night at NFR

Big Valley’s Thurston has wild ride. Donalda’s Cassidy ranked number one steer wrestler in world

Girl opens Christmas present she gave to boy when she dumped him in 1971

Adrian Pearce, now a married father of two, received the small present from his highschool sweetheart

Liberal Party moves Trudeau fundraiser from military base

The fundraiser is scheduled for Dec. 19, with tickets costing up to $400

Federal government plans examination of coerced sterilization

The Liberals have been pressed for a rapid response to recent reports on the sterilizations

Huitema, Cornelius named 2018 Canadian Youth International Players of the Year

Huitema was captain of Canada’s fourth-place team at this year’s FIFA U-17 Women’s World Cup

Canada not slowing emissions from oil and gas: environmental groups

New report released at the United Nations climate talks in Poland

Goodale to ‘examine’ transfer of Rafferty to medium-security prison

Michael Rafferty was sentenced to life in prison in 2012 in the kidnapping, sexual assault and first-degree murder of Tori Stafford

Minister appoints former CIRB chair to resolve Canada Post labour dispute

Postal workers engaged in weeks of rotating walkouts

Omar Khadr to ask for Canadian passport to travel, permission to speak to sister

He spent years in U.S. detention at Guantanamo Bay after he was caught when he was 15

Missing B.C. man might be headed to Alberta

Jeremy Bauer, 40, was last seen on Dec. 6

Most Read