Alberta pork producers look at single desk selling

After years of losses, many will abandon the sector if things don’t change, says Alberta Pork

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Glacier FarmMedia – When it was wheat, Alberta led the fight to get rid of single-desk selling. But it’s a very different story when it comes to pork.

Two-thirds of Alberta Pork producers voted in favour of investigating a single-desk marketing system similar to Quebec at their virtual annual general meeting held November 23. Thirty per cent voted against, and the rest abstained.

It is a sign of how bad things are — and have been for quite a while — for hog producers in the province, said Darcy Fitzgerald, executive director of Alberta Pork.

“Even Hutterite colonies are leaving (the sector), which we’ve never seen before,” he said. “Money is not going into the industry like it should — for maintenance, repairs, and building.

“The packers need to come to terms with the fact that they’re not going to have a supply if they don’t change.”

Alberta Pork used single-desk marketing up until 1996.

In his chair’s report at Alberta Pork’s virtual AGM, Brent Moen used this chart to illustrate the financial woes of hog producers. The bottom (orange) line shows the price of hogs relative to 1996. It is basically flat while the Consumer Price Index (yellow line) has gone up more than 50 per cent and farm expenses (blue line) have more than doubled. photo: Alberta Pork (video screengrab)

“Everyone put their bid on for pigs and they all sent in their bids into one organization, Alberta Pork — based on pricing, you’d get pigs,” said Fitzgerald.

The Quebec model is somewhat different.

Producers, acting as a group, first meet with packers to work out a pricing formula for a three-year period. The formula involves things such as the U.S. cut-out price (that is, the value of the meat), a premium for hogs that are ractopamine free, quality factors, and discounts for other factors. If the groups do not agree, the matter goes to an arbitrator.

“The arbitrator then makes its decision and says that’s what the pricing system will look like,” said Fitzgerald. “And that’s what they have to work with for the three years.”

It’s estimated Quebec producers receive about $35 more per pig than their counterparts in Western Canada.

But returning to the single-desk model isn’t necessarily the first choice of Alberta hog producers. The motion approved at the AGM only calls on Alberta Pork to “pursue a single-desk selling system, similar to Quebec.” Even the mover of the motion wasn’t calling for a return to the type of single desk that his organization used to operate, said Fitzgerald.

“The mover spoke to everybody and said, ‘I myself don’t think going back to 30 years ago is the right thing,” he said.

Rather, the vote in favour is more of a shout-out from producers who want a fix for a broken system, which is currently based on U.S. hog prices but not the value of pork.

“If we look at the last five years, no one has made any real money in the industry and that’s because the packers are taking it all,” said Fitzgerald.

Pork producers are suffering major losses even as demand for Canadian pork continues to skyrocket, he said. In 2019, packers in Canada sold $400 million more pork than they did the previous year (in terms of exports).

“This year in the first eight months, they sold $550 million more than they did in 2019,” he said. “They are seeing a lot of transactions coming through their door.”

Alberta Pork has been working with producers to obtain their actual expenses and revenues — data that shows producers have been losing about three to five per cent every year on a return on investment.

They’ve also shown the numbers to packers in an effort to show that things need to change.

Alberta Pork’s board will be meeting (virtually) to discuss the resolution and consider next steps. The organization has been in talks with marketing associations and pork groups from other provinces, trying to find a solution to the problem. Something along the lines of the Quebec model would require provincial government regulations.

“You can get things going in each province, but it’s just a matter of how much work it will be, especially if it is legislated,” said Fitzgerald. “The producers are pretty desperate, so even if it needs to be legislated, let’s look at that.”

A simpler option would be to strike a deal with the big three packers: Olymel, Donald’s Fine Foods and Maple Leaf Foods. The latter two did increase payments temporarily when prices were very low in the spring while Olymel recently announced an increase in its floor price.

“There are a whole host of other options that you can look at and convince the other parties to come to the table and come up with an agreement of some sort,” said Fitzgerald.

This article was originally published at the Alberta Farmer Express.

About the author

Glacier FarmMedia staff

Alexis Kienlen is a reporter in Alberta for Glacier FarmMedia.

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