The Rural Voice, 1982-03, Page 8Pork at the crossroads
by Susan White
Whether they favour supply manage-
ment, free enterprise or are still thinking
over their options, pork producers Rural
Voice has interviewed in the last few
weeks agree on one thing: the Bowman
report on marketing alternatives for the
pork industry does a terrific job.
Careful not to recommend a course of
action, the report looks at the present
system and how it can be improved. Then
it investigates supply management and
emphasizes that lots of options exist there
too.
It's full of facts about each marketing
path, and as Perth pork producer John
Lichti of Shakespeare says "the more facts
you get the more you're able to see the
pitfalls in any particular area."
The Ontario Pork Producers' Marketing
Board (OPPMB) _ commissioned the
report because "a specialized and
capitalized industry is facing its twelfth
quarter of severe price depression," said
its author Dr. Gordon Bowman, of the
University of Guelph, at the annual
meeting of the Perth County Pork
Producers.
Bowman says the prolonged low prices
are made worse because pork producers
have specialized and their flexibility is
restricted because of aebt loads that
allowed them to purchase the latest
technology. Pork supplies have been
ample and there is been some consum er
resistance to buying it. Then the U.S. pork
industry, which he says in the past has
"tended to be a bit sloppy", is becoming a
high volume, low margin operation.
aggressive and capable of quick change.
Bowman concludes Canada can continue
to compete in the U.S. market if we get
more aggressive and efficient.
Most interesting of all, Bowman says
farmers should investigate using more
labo it instead of more capital borrowed at
high interest rates to pay for labor - saving
devices. It can be cheaper, and it certainly
adds flexibility.
The U of G animal science sp ecialist
told the Perth meeting there are four kinds
of pork producers. The first will get out
when times are tough; the second will sit
back and "live it through"; the third will
look for ways to improve the present
PG. 6 THE RURAL VOICE/MARCH 1982
system and the fourth group will want
ways to bring in a new system. ''My report
is addressed to the two groups interested
in change," Bowman says.
Stressing that right now the industry
has failed in only one way - twelve
quarters of poor prices - Bowman says "in
all other ways the existing system works
perfectly well. Shorter low price cycles
were okay but now, because the economy
is so bad, (the situation) is critical for
some."
So, how can the industry's present
operation be improved? Better market
intelligence, says Bowman. both to
monitor the flow of investment into the
industry and to establish continuous
cost -price analysis. As well. he suggests
more product and market development
work: better financial management
programs; reducing production costs; a
futures' market service run by the
OPPMB; and forward contracting with
packers.
A key improvement, Bowman says.
would be a national stabilization program
with contributions from both levels of
government and from producers. Part-
icipation would be voluntary; weaner and
feeder operations should be eligible for
partial payments. He favours shorter
calculation periods for payment, and
graduated entry to the program so that
expansion is curbed during inappropriate
times.
Other, options to add to the present
marketing system include a form of
price/income insurance. subsidy
programs in which governments maintain
a floor price for a given period and standby
controls to be used in the case of an
emergency ... in the event the U.S. border
is closed.
If Ontario's producers are unhappy with
the cyclical nature of the industry they will
favour a move to supply management, Dr.
Bowman told the record turnout in Perth.
"There are lots of flexibilities and options
on a supply management program. Don't
think in terms of stereotypes." he
cautioned. A pork supply management
agency would have to be national in scope.
and yes, he told questionner Hans
Feldman, it might be necessary to set up a
national meat marketing agency.
Pork supply management, the Bowman
report says, may have to operate on a
two -price system with a lower export price
and a board -set price for Canadian
consumers. Or, the industry might have to
ignore exports altogether. resulting in a
fifteen to twenty per cent drop in current
Canadian production once U.S. and
Japanese markets are no longer a factor.
As the report's summary says: "The merit
of developing an export market at a
potentially unprofitable price must be
weighed against the maintenance of a
reduced but profitable domestic market."
How will quota be allocated to pro-
vinces? Bowman suggests several pos-
sibilities: basingit on current or historical
production, on self-sufficiency. compara-
tive efficiency or production potential.
Once established. allocation changes
would have to be made through federal -
provincial negotiation.
Supply could be controlled either at the
market or at the production stage.
To preserve the present industry
structure in Ontario (weaner, feeder and
farrow to finish operations) a quota system
based on sows or weaners and market
pigs. with farrow to finish operators
holding quotas for both levels of pro-
duction, would be needed. Quota on sows,
facilities, or other criteria might change
the way the industry is structured.
Emphasizing that the report is designed
to widen options, not narrow choices.
Bowman explained quota could be al-
located. transferred and managed in a
variety of ways. There are choices to make
about pricing too. It could be based on cost
of production, marketing or both. Or just
supply could be controlled and prices left
to the competitive market.
Bowman cautions that allocation of pigs
to packers should be flexible. Pork is very
important to the packing industry be cause
so much of it is processed. "We either
make it a profitable climate for meat
packers or we do our own packing."
It's the big powerful industries who
really have supply management now. one
Perth pork producer told Bowman, while
another farmer said he was worried by the
cost of administering a supply