The Rural Voice, 1999-03, Page 461
New marketing
options unveiled by
Ontario Pork CEO
Instead of preventing producers
from having direct contracts with
packers, Ontario Pork should find
options so attractive, producers will
want to take part, Ontario Pork's
CEO Paul Knechtel told Huron
County Pork Producers January 21 in
Varna.
Knechtel, unveiling a new
marketing strategy to producers at the
Huron association's 50th annual
meeting, said forcing all pork
produccrs to sell through the board
would only mean some angry
producers and angry packers. "I wish
1 had a magic wand and everybody
would jump on stream," he admitted.
"I believe with the options we have
here that a lot of people arc going to
come back and say 'I want a piece of
that'," Knechtcl said.
New marketing options proposed
include the "Platinum Program"
under which Ontario Pork will
contract with packers to supply hogs
under tight specifications which
might include specific weights,
delivery dates, loin -eye depth and
spccific genetics. Individual
producers can decide if they want a
piece of that contract and sign
guarantees with Ontario Pork to
deliver as required.
Packers say they are willing to pay
premiums for a top quality product
that meets tight specifications,
Knechtcl said.
The second option for producers
will be a contract pool under which
the revenue from all hogs sold to
packers through block contracts
would be blended on a weekly basis.
This pool would be attractive to those
producers who arc prepared to
commit to deliver a guaranteed
number of hogs each week and are
prepared to share information on
production intentions and inventory
levels.
Knechtcl said one of the positives
that has come out of the current hog
crisis and the closing of Quality
Packers during its current strike, is
that five new U.S. customers have
42 THE RURAL VOICE
News
been found who are so pleased with
Ontario hogs they're willing to sign
long-term contracts. The problem is
Ontario Pork doesn't have the
information on producer intentions to
be able to guarantee delivery, he said.
"If we know what your intentions
are we have a better idea and can
manage the marketing," Knechtcl
said.
The original pool would still be
available for farmers who do not
want to commit to producing specific
numbers per week. "We believe there
is room for producers like that,"
Knechtel said.
The pool would also be open for
those who produce pigs in excess of
their contract.
The pool program would offcr hogs
on a spot basis to packers. In times of
shortage of spot hogs there might be
a good price but if supply is high, the
price will suffer he said.
The fourth option would be
continuing direct contracting between
packers and producers, Knechtel
said. Ontario Pork would be a third -
party signatory to such contracts and
all settlement would come through
the board.
Ontario Pork has already been
negotiating some contracts under the
new strategy, Knechtel said. "Some
innovative contracts are being
negotiated right now. We believe this
marketing plan is sustainable. It's
profit -oriented for all parties."
Others weren't so sure. Bob
Robinson of R.R.4, Walton worried
that the pool would become a
dumping ground for inferior pigs.
Producers would sort out their best
pigs for contracts then put the rest in
the pool, driving the price down, he
predicted.
Knechtel said he felt the price grid
would penalize poor quality pigs but
he said the pool can be changed or
more pools created if this proves to
be a problem.
Dave Linton of R.R.2, Blyth, said
the plan looks good on paper but
with producer -packer contracts still
allowed and packers setting the
specifications, "a year from now
we're going to be in the same boat
with the same problem."
A huge majority of producers at the
meeting wanted Ontario Pork to end
direct producer -packer contracts and
sell all hogs again.
Candidate after candidate seeking
positions as councilmen for the
Huron County Pork Producers (40
ran for 29 positions) supported
Ontario Pork's position as a single -
desk for marketing all hogs in
Ontario.
By the end of the meeting a
resolution had been proposed and
quickly passed calling on Ontario
Pork to take control of all contracts
and regain control as sole seller of
hogs in the province.
President Gary Love set the tone
for the evening when he recalled the
efforts of his grandfather 50 years
ago to help organize the Pork
Producers Association to give
producers more power at a time when
most pigs were sold to drovers and
"the average farmer took what was
offered".
Half a century later farmers are in
trouble again and need to act
together, he said.
"We're in the middle of a complete
ravaging of producers."
He pointed to information from
North Carolina where 50 per cent of
hogs are owned by integrators were
getting $51 a hundred at the same
time as independent producers were
getting $39.
"I hope we in Ontario and Canada
can learn from U.S. and not make the
same mistakes," Love said.
He said the pork industry is at a
crossroads in Ontario and
independent producers are in danger
if they don't work together to regain
control of marketing. Otherwise
farmers will be forced into contracts
with packers and "you'll be a hired
man on your own farm, carrying a $1
million lunch pail."
Love called on banks and lending
institutions to be lenient in helping
producers get through the cash
crunch caused by record low prices
in December. One generation of
young farmers was lost by the debt
crisis of the 1980s and another has
been hurt by high land prices in the
1990s, he said. "If we lose another
group now, who will be the stewards
of the land 20 years from now?"
Producers passed seven resolutions.
Besides the resolution calling on