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Grabill, Indiana | I jsut received this, it should make us all think.
Ottawa to pay farmers $50-million to slaughter hogs
COMMODITIES: $225 A PIG
PAUL WALDIE AND JOE FRIESEN
The Globe and Mail - Canada
April 15, 2008
TORONTO and WINNIPEG -- In an unprecedented move, the federal government plans to pay hog farmers up to $50-million in total to slaughter as many as 150,000 breeding swine. Farmers will receive $225 for every hog they kill, so long as they agree to wipe out their entire breeding herd and stay out of the hog business for three years. The government hopes the program will reduce a glut on the market that has helped drive down prices.
"It's a pretty drastic step," said Clare Schlegel, a hog farmer near Kitchener, Ont., who is also president of the Canadian Pork Council. The $225 price is roughly four times what a farmer would get for a culled hog on the market today, he added.
Mr. Schlegel said the massive cull, which is expected to reduce the nation's breeding herd by 10 per cent, is the only way to save thousands of hog farmers across Canada. "We're under a fair bit of economic stress and turmoil," he said, adding that he is losing as much as $65 on each pig on his farm.
Rising feed prices and the stronger Canadian dollar have pummelled pork producers, pushing many out of business and leaving others struggling to get by.
This month, Stomp Farms Ltd., the second-largest hog producer in Saskatchewan, filed for bankruptcy protection and many other farmers have quietly sold off their stock.
Joe Kleinsasser, who runs a hog farm south of Saskatoon, said he is losing roughly $50 a pig even though he grows his own feed grain. "You are looking at a very dire situation," Mr. Kleinsasser said.
Hog prices have sunk more than 20 per cent in the past year, to about $100 a pig. Meanwhile, costs - especially feed grain - have soared by more than 50 per cent, pushing the overall cost per animal well above $150. Feed accounts for roughly 60 per cent of the cost of raising a pig. Hog farming has become specialized and capital intensive, making it difficult for farmers to switch to producing other commodities.
The stronger Canadian dollar has also hurt farmers because hog prices are set in the United States. So as the Canadian dollar strengthened, the return to Canadian farmers shrank. But as the U.S. dollar weakened, American farmers found new export markets for their pork. As a result, while Canadian farmers have been cutting back on their herds, U.S. farmers have been raising more hogs.
The total number of pigs on Canadian farms fell 6 per cent last year to 14 million (that includes about 1.5 million hogs used for breeding). However, the total U.S. herd increased 4 per cent in 2007 to just over 65 million hogs. It jumped 6 per cent in 2006.
"There's an awful lot of hogs out there," said Kevin Grier, a senior analyst at the George Morris Centre in Guelph, Ont., which studies agri-food issues. Canadian farmers "are losing a lot more than the Americans are," he said. "The only way it will turn around is by a reduction in hog numbers."
Another major headache for Canadian producers is the introduction of new country-of-origin labelling laws in the United States next September. Canadian farmers export more than half their hogs to the U.S.
The legislation has grocery retailers in the U.S. nervous about selling specially labelled meat, and many have started to refuse to take any pork products that originated in Canada because of the added regulatory burden. That has hit farmers in Manitoba, one of the largest pork-producing provinces, especially hard.
Karl Kynoch, chair of the Manitoba Pork Council, said killing pigs with no market for them is a last resort for producers, but many may have no choice but to join a mass cull.
"We're in extremely severe times here and some producers are having to make that choice, even though it goes against everything they believe in," Mr. Kynoch said.
"Every week we hear of more producers closing their operations because they're not able to feed the pigs any more," Mr. Kynoch said.
George Matheson, who farms near Stonewall, Man., said he doesn't want to take federal government money to cull his animals. He believes the industry will turn around a year from now, citing positive signs of a price increase in the futures markets.
"I haven't run out of money yet, but I'm getting pretty close," he said.
A sector in decline
It's costing more to feed pigs, yet they are fetching less at market.
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Canadian Sow Slaughter
