An overall climate of optimism is a more than a little unfamiliar for Canadian pork producers, when things have been so bad for so long. But there’s hope that promises made years ago will finally start to bear fruit, say the chairman and the executive director of Alberta Pork. Strengthening the value chain, continued vigilance and improvement in bio-security and developing financial tools to help re-establish relationships with bankers and rebuild bruised and battered infrastructure were the chief areas of discussion at recent meetings held with producers in Lethbridge, Red Deer, Vegreville and Grande Prairie.
Chairman Frank Novak had recently taken part in the Pork Value Chain Roundtable, held in Ottawa between representatives of each link in the chain, from producers to government.
Ottawa topics focused on swine health, threats from foreign disease, an update on porcine epidemic diarrhea and the importance of keeping the disease from spreading into and within Canada.
“We also talked about how the pendulum has swung and we have a supply-demand imbalance with respect to producers and processers,” said Novak.
“We have some major processors who are short of hogs, and significantly so. That brings up the whole discussion of how do we recapitalize our production industry?”
Strong prices and reduced feed costs are now enabling producers to start paying off outstanding debts and think about replacing buildings and equipment that have fallen into disrepair because there simply wasn’t enough money to properly repair or replace them.
However, producers have been left so shell-shocked from years of financial stress that it’s difficult to be optimistic, despite strong prices and the need for significantly more slaughter hogs, particularly in Western Canada, said Novak.
Most barns that were closed during the transition program are now eligible to be restocked, but there aren’t enough spaces within those barns to fill the shortage at Western Canadian packing plants, he said.
“We’re probably 50,000 hogs a week short in Western Canada now. Maple Leaf is running significantly below capacity; Olymel is not quite so badly off on their one shift, but of course they hardly ever did get a sniff at getting close to starting up the second shift,” he said.
Shortages of hogs can continue for only so long before the processers start hurting financially, said Novak.
It comes down to the farms to ramp up production so the plants can keep their lines full and their doors open.
“The reality is, somewhere we need to find hundreds of millions of dollars over the medium term to build a lot of barns,” said Novak.
The danger is that expansion projects could overshoot the mark if a major plant shuts down, he said.
“We were talking a lot in Ottawa about trying to figure out how you balance the supply and demand in Canada and certainly in Western Canada, so that you don’t end up in that situation.”
Although supply management was discussed in the past, when things were bad, that sort of program is definitely off the table, said Novak.
“That one’s a non-starter. It would never happen, politically, anyway. The governments have no appetite for that. The producers have no appetite for that, really either.”
Labour continues to be a factor as well, although to a lesser extent, he said.
Hiring practices have become a more contentious with public complaints that too many companies are using temporary foreign workers and the subsequent ban on hiring foreign help in restaurants and hotels.
Those perceptions threaten to drain the labour pool that has been so important in Western Canada’s swine industry, said executive director Darcy Fitzgerald.
The traditional labour pool in rural areas is much smaller than in years past, with “way too many opportunities” in other industries, including oilfield and construction, drawing from a shrinking population in the countryside, he said.
“We just don’t have a big group of people lined up to be on farms. We’re not in the city, we’re not easily accessible, lots of people don’t have a background in farming they don’t like that kind of work.
“So, we really are (held) to bring in temporary foreign workers. Producers would rather hire Canadians first of all – why not have somebody local? Having said that, they’ve had great success with workers that have come from other countries,” said Fitzgerald.
Aside from immediate challenges, the industry needs to figure out how to deal with longer term issues, including the supply-demand imbalance and figuring out how to get the whole value chain working together and trying to rebuild domestic markets, said Novak.
“Those of us who’ve been around for a while, we’ve spent the last 15 years hearing about how we’re going to feed the world and how we’re going to do really well and the demand would finally outstrip the supply and all that. We’re kind of wondering if we’re not starting to see the first signs of that actually coming to fruition now,” said Novak.
Among the signs are production concerns in China and its acquisition of Smithfield Foods, along with rumblings in Asia that they’re losing confidence in the supply and are looking at other business deals to secure supplies.
“They’re thinking 10, 20, 30 years out – not 20 weeks out,” he said.
That is quite a different way of thinking than here, where producers look toward the medium and longer terms, while the meat industry looks only two to three weeks down the road. Part of the reason for that is because they have to, said Novak.
However, that mentality appears to be changing as the industry looks at longer term forecasts, including prices of meats, feed grains and feed ingredients, he said.
“They’re all heading up, and the bottoms of the charts now look much like the peaks did 10 years ago. I wonder if it isn’t finally that point in time when we move to a new price level and we actually have an opportunity to make money for a more consistent time period.”
Novak and Fitzgerald also updated producers on more immediate concerns, including the progress of disease management.
Measures to check the spread of PED are continually revised, with ongoing participation from farmers, truckers, assembly yards and processing plants in the effort to protect the industry against PED and other contagions, said Fitzgerald.
The Alberta government recently added delta corona virus to its list of reportable diseases, which means similar responses to PED and transmissible gastroenteritis (TEG) would kick into gear if a positive test were made.
As of late May, PED had not yet been found on any Alberta farms or in high-traffic areas, where test swabs are taken twice per week on average, said Fitzgerald.
The province has provided industry with $1.3 million through the Growing Forward program to help producers beef up their bio-security systems and to give assistance in the event an outbreak is discovered.
A portion of that funding was allocated to Alberta Pork to work with producers, he said.
“So far, and we count our lucky stars, there’s been (only) a few cases in the last while between Ontario and the one more that’s been announced in Manitoba – and that’s to be expected.” •
— By Brenda Kossowan