The Rural Voice, 1993-08, Page 57PERTH fit'
County Pork Producers NEWSLETTER
John Crowley, President
R.R. 2, Gadshill, ON NOK 1J0 393-6403
• The Rural Voice is provided to Perth
County Pork Producers by the PCPPA.
Pricing discrepancies challenge our future
The opinion expressed within does
not necessarily reflect the view of Perth
County Pork Producers' Association.
On Thursday, July 15, an
impromptu meeting was called at the
Upper Kinsmen Hall, Stratford to hear
presentations on the plights of Lorne
and Hugh Allin, pork producers from
Bowmanville, Ontario. The meeting
was originally intended to be only for
councillors of the Perth County Pork
Producers' Association; however, the
interest generated by the topic
necessitated a change in venue to a
larger and public forum.
Two issues dominated discussions:
1) How to deal with market hog
pricing discrepancies between the U.S.
and Canada.
2) Should the Ontario Pork
Producers Marketing Board continue to
take court action against the Allins to
prevent them from marketing Ontario
grown market hogs in the U.S.
According to the Allins, over the
past nine years the Ontario price of
market hogs has been consistently low-
er than the U.S. price. Consequently,
Ontario production is approximately 86
per cent of what it was in 1985, while
U.S. production is 118 per cent of what
it was in 1985 (in North Carolina,
where the industry is dominated by
large integrators, production is 228 per
cent of what it was in 1985).
Our previous competitive advantage
has been given away through discount-
ed market hog prices. The Allins stated
that over the last nine years, their farm
gate returns for U.S. marketed pigs
were $17 per pig more (before coun-
tervail). This price advantage encour-
ages investment for the future. U.S.
integrators are enough of a challenge to
compete against assuming we all re-
ceive comparable prices for our end
product — our current efforts are insuffi-
cient in competing against them if they
are actually receiving $17 more per pig.
We must adopt new and creative ideas
to survive — all industry segments must
be pressured and challenged.
The Allins also shared some of their
frustrations with the pork processing
industry. According to them, over the
last nine years the value of pigs at
Ontario processors has averaged 82 per
cent of the wholesale dollar, while at
U.S. processors the value of pigs has
averaged 92 per cent of the wholesale
dollar. The Ontario processors have
been more "astute" at retaining the true
market value of pigs.
What is perhaps most frustrating at
present is the "guaranteed hour"
arrangements some labour groups have
arranged with Ontario packing plants.
For example, a plant may guarantee and
pay for 38 hours of labour during a
week in which only 32 are worked. It
is supposedly cheaper for them to pay
for an additional six hours of labour
than to bid more for pigs to ensure a
full kill. The plants have also been
successful lately topping up kills with
loads of pigs from western Canada,
often paying higher than the Ontario
price (before paying additional freight
in the neighbourhood of $12 per hog to
get it to Ontario). It is cheaper to pay
more for a few pigs from outside the
Ontario system than to bid the average
price for Ontario pigs upwards.
The meeting highlighted how we all
feel a sense of frustration at present.
We know changes are necessary, but
are unsure of which direction to take.
The majority at this meeting, including
the Allins, did not criticize co-operative
marketing; in fact, most support it.
What was criticized was our lack of
freedom, choice and assertiveness to be
PCPPA 10th ANNUAL GOLF TOURNAMENT
Wednesday, September 1 — Listowel Golf Club
Tee -off times 9:00 a.m. to 11:30 a.m.
Cost: $35 per person (includes green fees, lunch & banquet)
Banquet at 4:30 p.m.
To register, call Ted Groenestege, 348-8262
price -makers, not price -takers. With
the current U.S. countervail, we don't
sell our pigs at the present U.S. price;
we sell at what the Canadian packer
would pay for American pigs.
Our recent formula -pricing changes
are attempting to address this difference
but the process is slow and burdened by
the politics within our industry.
Current costs of selling live pigs to the
States are simply too high — the cost of
exporting pigs needs to be applied only
to the pigs exported, not passed on to
all pigs through the current Ontario
pricing system.
Many think one solution is to open
the border both ways for the trading of
live market pigs. The Ontario bid price
would thus reflect the current true value
of Ontario -produced pigs (assuming
countervail is dropped). Whether this
would be a simple solution may never
be determined. However, we do not
have the time to discuss it any further,
we must act. While we struggle, the
U.S. producer continues to grow and
pursue profitable foreign and domestic
markets. We need proactive and
creative actions today, not tomorrow.
Should producer funds be utilized to
take court action against the Allins for
refusing to give their pigs away at $17
less than what their created markets
truly bear? The consensus of the
majority of the producers at the
meeting was no. It was felt that our
energy, time and dollars could be better
utilized (one suggestion was to
challenge Ontario pork processors in
.court for collusion). This court action
has the potential to further fragment our
already fragile industry. Chances are
our government and processors will not
show the leadership to ensure this
industry has a competitive future. It is
up to the pork producers of Ontario.0
Mark Yungblut
Pork Products available from:
Wayne Hartung at 291-4038
Alfred Young at 348-9352
Fred DeMartines at 393-6812
Martin VanBakel at 345-2666
Dennis Zehr at 595-4771
AUGUST 1993 53
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