It has been a brutal month for the North American pork sector due to demand destruction, packing plant closures, and hog futures that have dropped by at least 30 per cent. With every plant shutdown, the inventory of market-ready hogs compounds, increasing the stress on the entire value chain.
The Canadian Pork Council (CPC) released details on Thursday of its request for help from the federal government, which now includes ad hoc direct payments to support the immense financial burden placed on Canadian hog producers. The program is yet to be officially approved by the government but will be presented to the Minister of Finance later today.
The details of what the CPC is seeking are as follows:
- $400 to $500 million in direct payment to producers (approximately $20 per head per hog);
- Immediate payment to deal with urgent severity of the situation;
- Will cover all hog producers in the value chain, including farrow to finish and iso-wean production.
- It is not tied to inventory depopulation decisions.
Rick Bergmann, CPC Chair and Manitoba pork producer, says that COVID-19 has made a bad situation worse. Bergmann says that the hog market has been in free-fall for the last few weeks, and Canada’s 7,000 hog producers are facing market devastation, and the hurt will only increase as the pandemic drags on.
“Market returns do not cover costs right now. Initial panic buying has ceased and now, producer prices are falling because of oversupply (induced by lost access to processing and overseas markets), even while retail prices are rising,” Bergmann says. Farm-gate prices have fallen 30 per cent at a minimum. Isoweans — 25 day-old pigs have zero value in the market place — literally, they have no dollar value.
Bergmann says the industry is anticipating $675 million in losses anticipated, calculated at -$30/hog for each hog marketed, on average. The losses could be as high as $50, depending on the region.
“This can’t be maintained,” he says. The government has pushed money out to businesses, but it doesn’t address the challenges hog producers are facing. “It’s a cash flow crisis and is impacting our viability. Without support, farmers won’t be in a position to pay existing bills and debt, let alone additional debt.” Farmers are facing the grim reality of possibly aborting sows or instituting welfare slaughter, as has happened in Eastern Canada at least once already where market-ready animals were euthanized.
The CPC is asking the federal government to protect the food supply and has requested emergency action and support payments, to pay bills, and add confidence in the market for farmers and consumers.
“Without action, family farms will be threatened and are threatened already,” Bergmann says.
It was announced last week by the White House that American pork producers will receive $1.6 billion in COVID-related assistance. The National Pork Pork Producers Council expressed concern that the amount will “fall short of what is truly needed.”
During the last major crisis for the Canadian hog sector in 2008, the federal government committed $50 million to a breeding herd reduction program, where producers who agreed to empty at least one barn of breeding stock for a minimum of three years received 225 dollars per culled sow, bred gilt, or boar.