The Rural Voice, 1999-07, Page 48PERTH illtk
County Pork Producers NEWSLETTER
Richard Yantzi, President
519-655-2766
• The Rural Voice is provided to Perth
County Pork Producers by the PCPPA
Any opinions expressed herein may
not necessarily reflect the views of
tire Perth County Pork Producers'
Association.
Ontario pork producers can't help
but be looking a little battleworn
these days. Although prices have
recovered to break-even levels, many
feel like they've been put through the
sausage grinder during the past year
or so. With a disastrous price collapse
and two packing plant strikes behind
us, the future can only go one way.
What can we learn from this recent
history to make us stronger in the
future? •
One issue that needs to be
addressed is that of direct contracts.
Although debated at length during the
March annual meeting, provincial
directors failed to come to a
consensus about how to deal with this
issue. I can't help but think that we
need to step back and review some of
the history of contracting so we can
decide where we want to go with it.
Calls for direct contracts came from
producers who were dissatisfied with
the aggressiveness of the sale
department at Ontario Pork. There
was a general feeling among many
producers that Ontario Pork was
merely allocating hogs and not
looking to sell our hogs to the highest
bidder, wherever that may be. Of
course, the first producers signing
their own deals received higher
premiums over the pool price, but as
more and more pigs were contracted,
these premiums fell. As long as no
unusual situations were taking place
in the marketplace (such as strikes, or
holiday situations), the price of pool
and contract hogs would track very
closely (within one per cent).
Many of the first contracts were
priced with a premium tacked onto
the pool price. The number of hogs
contracted reached a high of about 45
per cent in early 1995, when the
Board decided that contracted hogs
based on the pool would again be
sold through the pool. This action
reduced the percentage of contract
hogs to about 10 per cent, so very
few of the contracts had initially been
The ball is in our court
signed with specific details other than
a premium over the pool. I would
argue that we have fallen into this
same situation again, since most
contracts (window contracts being an
exception), are again being priced
with a premium (e.g. 2.5 per cent in a
102.5 per cent contract, these being
very common), over the base price
that the pool is based on. If these
hogs were rolled back into the pool,
the number of hogs on direct
contracts would be much lower than
the 65 per cent figure being quoted
recently.
There are some advantages to
having some hogs sold on direct
contracts. As long as the sale
department retains authority to
review the details of the contracts, it
allows them to see what kinds of
offers the processors are giving. This
information can be used by Ontario
Pork in its own negotiations with
processors. As long as direct
contracts are allowed, they also hold
Ontario Pork accountable to
producers to offer marketing
alternatives that match, or better, direct
contracts, or risk losing market share.
It seems clear that the board is not
willing to eliminate direct contracts,
one reason being that they do not
want to arbitrarily pull producers
back in who wish to do their own
marketing. Many producers against
direct contracts wold feel more
comfortable with direct contracts if
the number of hogs sold in this
manner was at a lower level (I would
suggest 30 per cent or less). It would
seem prudent for Ontario Pork to set
some goals in this area. It is also
imperative that the sales department
improve the number of options that
producers have to sell their hogs
through the Board with details and
pricing options that match, or
improve on, those offered by
processors through direct contracts.
Ontario Pork must also sell these
offers to producers by increasing
service levels to producers, and
actually going out and courting
producers in much the same way as
the processors have done. Ontario
Pork has already implemented some
changes to increase service levels,
such as hiring Doug Richards as a
field service representative, and
offering a new toll free number to
producers (which, by the way, is 1-
877-ONT-PORK), but it must
continue to improve both its offers
and service if it is to win back the
confidence of Ontario hog producers.
After emerging from the price
collapse, many producers feel that it
is important to market our hogs
collectively and gain some control
through a co-operative agency. We
can also see from the situation in the
Western provinces that with the
dismantling of their marketing
boards, price discovery has all but
disappeared. It is important that we
retain the advantages that a marketing
board and working together gives to
all producers. If, as producers, we
wish to see the influence of direct
contracts decrease, then we must give
preference to the marketing options
offered by the Board, as long as they
are as competitive as those offered by
direct contracts. We have asked
Ontario Pork to become more
aggressive and responsible to the
producers of this province. If they
come through for us, then it is up to
us to support them. The ball will be
in our court.0
— Submitted by Jim Van Herk
PERTH COUNTY PORK PRODUCERS' PORK PRODUCTS
• Smoked Pork Chops • Fresh Pork Chops • Stuffed Loin Chops • Smoked Sausage
• Smoked Cheddar Sausage • Bacon Burgers • Teriyaki Pork Steaks
• Vittorio's BBQ Sauce
AVAILABLE FROM:
Fred de Martines (Sebr.) 393-6812
Martin van Bakel (Dublin) 345-2666
Walter Bosch (Monkton) 356-9000
Ted Keller (Mitchell) 348-9836
JULY 1999 45