The Rural Voice, 1980-06, Page 42Perth Pork Producers' News
Pork council
disappointed
BY HANS FELDMAN
The Federal Minister of Agriculture, Eugene Whelan
announced the stabilization payment for hogs for the year,
ending March 31, 1980, will be $2.46 per cwt. for a max. of 5000
hogs per producer. To receive the stabilization payment.
producers have to send in an application and submit their
grading slips for proof of production. Application forms will be
availble through federal ag. offices including FCC offices and at
assembly yards.
The Canadian Pork Council is disappointed with the low level of
the stabilization payment.
Below is an account of how the level of stabilization could be
arrived at as written by Adrian Vos prior to Mr. Whelans
announcement.
There are also reports by Adrian on the controversial
cost -of -production issue and on the meeting of members of the
OPPMB with Ontario Minister of Agriculture, Lorne Henderson.
The OPPMB reports that a special committee now meets with
a survey group from OMAF Economics Branch to discuss cost of
production.
The OPPMB 1980 executive was elected as follows: Chairman,
H. Malcolm, Vice -Chairman -D. Farrel, Executive, H. Malcolm,
D. Farrel, M. Aberle, C. Harrop and T. Smith.
FEDERAL STABILIZATION FOR PORK
Canadian Ag. minister Whelan is expected to make a
statement on stabilization payments to pork producers before the
middle of May.
In the last low price period (1972-'73) there was no
stabilization program but the Canadian government helped pork
producers to some extent by paying each producer $5 a hog, with
a maximum of $1,000 per producer.
Shortly after. a stabilization plan for agriculture was
developed and the pork industry is one of the , named
commodities.
Through a partly secret formula, the average cost over the last
five years is calculated. Then the average five year cost is added
to the formula. All on a 90 percent basis.
However, the government can change this to 95 percent if they
so wish. as they did with beef producers.
Preliminary studies by the Canadian Pork Council indicate that
a 95 percent formula would result in a pay -out of approximately
$5.70/hundred-weight (cwt). Total cost to the treasury would be
about $100 million.
If however Mr. Whelan sticks to the 90 percent formula, the
payment would be appr. $2.20/hundred weight, for a total of
some $45 million.
What, if any, is the limit on the number of animals to be
covered is a matter of speculation.
COST OF PRODUCTION FIGURES
A few facts about the cost of production as developed by Dr.
Gordon Bowman of the University of Guelph for the Pork Board,
may be helpful for pro 2r. vv ho are confused by the different
figures throv n around I • ould-be economists.
The interest cafeoIatior ,s based .on the following:50% of all
operating capital, 40% of machinery replacement value, 50% of
inventory value of stock (Commercial bank prime rate plus 1%)
25% of replacement cost of buildings at FCC rates.
As an example we assumed that $150,000 is needed for a
complete set of buildings and equipment for a 56 sow
farrow -to -finish unit, exclusive of land. The cost of servicing this
debt over a 29 year period is reduced to cost per pig per year at
two recent FCC levels, and at two levels of farmer efficiency.
Average Very Good
Old FCC rate 10% $19.00 per pig $16.00 per pig
New FCC rates 13% $24.65 per pig $19.86 per pig
'Bank Rates Over 25 Years Average Very Good
5 year fixed rate at $32.51/pig $26.19/pig
N.H.A. rate + 1%=18%
Floating rate 2% over prime $34.65/pig $27.19/pig
=19%
(figuring by Eric Alderson)
PORK BOARD MEETS HENDERSON
A delegation from the O.P.P.M.B. met with Ontario's Ag.
Minister Lorne Henderson to discuss some present and possible
future problems in the pork industry.
The'beard lamented the fact that "lending institutions, both
government and commerical, persist in being too free with their
money." This was called "a disservice to our industry."
Swine advisors from the OMAF should spend more of their
time advising new entrants into the pork industry about the
expertise needed for successful production. The delegation
asked the minister to "bring pressure to bear in the right
quarters."
Nevertheless, some of the best managers are now in trouble
because of the unexpected rise in interest rates combined with
low prices.
After presenting the minister with figures of financial help by
other provinces to their producers, the board asked for
government action on four points. 1. In the short term, provide
some help to cushion the impact of extraordinary interest rates.
2. In the longer term, find a solution to the problem of unfair
competition (from other provinces).3. Make representation to
the lending institutions to improve their lending policies. 4.
Ensure that a more cautious attitude be taken by OMAF personel
when advising potential newcomers to our industry.
STATISTICAL SUMMARY—IST QUARTER 1980
CANADIAN VOLUME
Below is an excerpt from the Mar ch 1980 "Report on
livestock surveys" published by Statistics Canada:
PIGS JANUARY 1, 1980
Total Pig Numbers up 14%—Total pig numbers for Canada at
Janury 1, 1980 are estimated at 9,096,000, up 14% from
8,009,000 at January 1, 1979. In the west, numbers increased by
15% while in the east numbers increased by 13%.
Sows for Breeding and Bred Gilts up 10%—The number of sows
for breeding and bred gilts is estimated at 958,400 which is an
increase of 10 %Q from last year. Western provinces showed an
increase. of 9% while the eastern provinces showed an increase
of 11%.
Farrowings up 14°/o— The 1979 estimate for farrowing from July
1, 1979 to January 1, 1980 is 854,000, an increase of 14% above
the 1978 estimate for the same period. Farrowings were dp 14%
in the west and 15% in the east.
Sows to farrow up 7% and down 1%— Farmers' reports indicate
that the number of sows expected to farrow from January 1, 1980
to April 1, 1980 is estimated at 420,700, up 7%. For April 1, 1480
to July 1, 1980 farrowings are expected to be 427,700, down I%
from the corresponding period a year earlier.
Once again. our advice is to keep sold up to date -Don't panic
and spread your shipments out evenly.
THE RURAL VOICE/JUNE 1980 PG. 43