The Rural Voice, 1988-10, Page 70PERTH
County Pork Producers NEWSLETTER
Gordon Jack, R. R. 1, Newton
595-8422
• The Rural Voice is provided to Perth
County Pork Producers by the PCPPA
REPORT ON THE OPPMB SEMI-ANNUAL MEETING
Dave McDonald, chairman of the
OPPMB, informed the councilmen that
the tripartite stabilization fund has ac-
cumulated to $140 million. A payout of
between $20 and $24 per hog is ex-
pected for the third quarter.
Dave gave the following explanation
of how payouts are determined:
"The tripartite plan is based on the
sale of market hogs and has three basic
elements: current market price, histori-
cal margin, and current cash costs.
The current market price is a
weighted average of hog prices across
Canada for the given quarter. The his-
torical margin is the difference between
the average market price and the aver-
age cash costs for the quarter taken over
a period of five years. These arc rela-
tively straightforward, but the current
cash cost is a little more complex.
TMed costs make up about 70 to 80
per ent of current cash costs. The
balance is made up of a number of costs,
including utilities, veterinary fees, and
several other cash costs. Because feed
makes up such a large portion of the cash
cost figure, it is very sensitive to
changes in feed prices.
It is important to remember that the
current cash cost is calculated over the
life of the hog. For example, the average
market hog sold in the third quarter of
1988 was probably born during the first
quarter and fed out during the second
quarter. In calculating the cash cost of
producing this hog, feed costs of the first
quarter will be charged to the breeding
stock and weaner pigs. Similarly, feed
costs in the second quarter will be
charged to the feeding period.
Feed costs did not rise dramatically
until June of the second quarter and they
continued to climb during the third
quarter. Thus, the full impact of the
current high feed costs will not be totally
reflected in the support price until the
fourth quarter. This lagging of the feed
prices reflects the actual feed costs dur-
ing the life of the hog. It also means that
high feed prices will be carried on in the
formula after feed prices have fallen. In
the long run the lag balances itself out.
To calculate the tripartite support
level, you must take into account all
three components. To find the support
level for the current third quarter we add
together the current cash cost for the
quarter plus 93 per cent of the historical
margin. If the sum of the historical
margin and the adjusted current cash
costs is above the current market price,
there is a payment. 1 fit is below the
market price, there is not.
An example is thc level for this cur-
rent quarter. Agriculture Canada is esti-
mating that the third quarter level will be
$165 per hundred kilograms and they
estimate $162 for the fourth quarter.
Our most up to date estimate for the
average national price for thc current
period is $140 to $135 per hundred kilo-
grams. This will generate a payment of
$20 to $24 per hog. If, as expected, there
Ontario Sales
1st Quarter
2nd Quarter
8 wks. to Aug. 27
Market Information
1988
1,212,676
1,116,728
673,850
Total Western production is up 8.9
per cent from last year. Quebec has
increased its production by only 2.2 per
cent. Total Canadian production is up
6.1 per cent.
Hog weights in Ontario are currently
about 1/2 kg heavier than a year ago.
Over the year to date, increased hog
weights in Canada have probably added
68 THE RURAL VOICE
1987
1,129,797
1,050,988
656,112
% change
+7.34
+6.26
+2.70
a further 1 per cent to pork tonnage.
Imports of pork into Canada are
down 57 per cent from a year ago to
3,756 metric tonnes.
So far this year, Canada has exported
the equivalent of 3,220,200 hogs or 32
per cent of our production. Total ex-
ports (hogs as pork equivalents and cuts)
are up 9 per cent from last ycar.0
is little improvement in fourth-quarter
prices, we can expect a similar payout
for that quarter."
A word of caution was issued to
producers who are losing patience with
the tripartite program and are thinking
about getting out. Everyone who joined
the plan signed a contract and the terms
of that contract will not be waived for
those who have had a change of mind.
Dave also brought everyone up to
date on the fed -grain stabilization issue:
"The Ontario Corn Producers Asso-
ciation (OCPA) has asked the federal
and provincial government to consider a
national tripartite program for corn.
Because of our lobbying, both levels of
government now recognize that live-
stock and poultry producers have a le-
gitimate right to be included, although
there is some quibbling about details.
I am pleased to report that the OCPA
also accepts including fed grains in fu-
ture programs. At a meeting on August
25, the OCPA presented a proposal in
which all corn producers will be treated
the same. The only difference is that
cash croppers would pay their premi-
ums when the crop was sold while live-
stock producers would pay half their
premium by January and the balance by
the end of the crop year. The question of
how to compensate for dockage and
storage loss on home storage and eleva-
tor sales is still up for discussion.
The new tripartite program for corn
would be voluntary. To qualify, produc-
ers would be required to register their
acreage and intended use after planting.
Livestock producers would also be re-
sponsible for the cost of a verification
inspection at harvest. Your board com-
pliments the corn association for its
proposal."
Every producer is aware of the
board's quick response to a drug resi-
due incident last winter. However, since
that time nine drug-related residue vio-
lations have been detected in Ontario by
Agriculture Canada. In addition, U.S.
authorities have reported three more
shipments of porkfrom Ontario packing
plants as having drug residue. The
board is, justifiably, not satisfied with