The Rural Voice, 2000-01, Page 44News
Wayne Snyder of Farmland Industries says competitiveness in pork is
now at marketing level and producers must find a buyer.
Marketing key to
competitiveness in
pork, speaker says
The battlefield in competitiveness
in the pork industry has shifted from
the lowest -cast production to
marketing, a buyer for a large farmer -
owned pork processing co-operative
told pork producers attending the
Competitiveness seminar at
Shakespeare December 1.
Wayne Snyder, vice-president for
livestock production with Farmland
Industries Inc., told the overflow
crowd at the meeting, sponsored by
Ontario Pork and OMAFRA, that the
situation has changed since the time
when a producer who supplied a
reasonable quality product at the
lowest cost was guaranteed of a
future.
He told the story about turkey
producers he knew who were the
lowest cost producers but when the
packing plant that bought their
product closed, they were out of
business.
Today the key for a farm to be
competitive is to have access to a
market, Snyder said. That has led
many producers into contracting
situations.
Today's big buyers want an
integrated production system, he
said. McDonald's, Hardees, the
Japanese, all "want to be able to trace
40 THE RURAL VOICE
the product right back to the farm."
This is a challenge for Farmland,
which is not an integrated company,
Snyder said. The company's
integrated competitors argue that
Farmland is made up of independent
producers and "independent
producers won't listen".
Pork producers "have to realize
we have a buyer out there," said
Snyder who is in charge of securing
product for Farmland's four pork
processing plants.
McDonald's, Snyder said. send in
a team of eight people to a packing
plant to see how it operates. They
particularly concentrate on how hogs
are handled and killed. That's a
significant change in what happened
in the past, he said.
Huge U.S. giants like Smithfield
are actually paying more for
contracted hogs than they would on
the open market but they're willing
to pay that price to have control of
the product, Snyder said.
The dilemma is where the profit
sector in the pork food chain will
reside — in the production sector or
in the processing sector. In large
integrated companies there doesn't
have to be a profit at the production.
level if there is sufficient profit at the
processing level.
Many of Farmland's producers
don't like what they're being told by
the company, he says. The
Midwestern U.S. regional co-op is
owned by 1600 local co-operatives
representing 600,000 farmers
throughout the midwest. It kills eight
million hogs a year in four kill plants
but that's only a fraction of the hogs
produced by the farmer -members.
Farmland started as an input -co-op
but now processes beef and pork and
markets grain.
The company buys 42 per cent of
the pigs it needs on the open market
but three years ago started a
vertically -integrated program to
provide a uniquely superior product
called America's Best Pork.
"It was a consumer -driven focus,
not a production -driven focus,"
Snyder says.
The product begins with the
genetics. "The Farmland Pig". Today
Farmland manages 81,000 sows.
38,700 of them owned by the co-op
and some in a joint venture, Alliance
Farmers owned by 60 producers who
start with 2500 -sow units.
Though many of the sows are
owned by Farmland, "our ultimate
objective is to have member
ownership," Snyder says. "The intent
is to build equity ownership into the
new style of production. We care that
our members participate."
A producer buys a unit of
ownership in Alliance Farms.
Alliance Farms is there to produce a
quality product, Snyder said. The
unique set-up tries to keep farmers
independent while producing a
uniform product.
A unit of ownership owns a share
of the whole organization. If a farmer
wants to retire, he can sell his unit of
ownership.
"Not one share of stock has ever
sold for less than it was bought for,"
Snyder said proudly.
Those buying into the system can
get help financing new buildings. A
financing charge is made against
each delivery. Eight years after the
producer makes his first delivery,
that financing charge is dropped.
America's Best Pork is based on a
three-part program. It starts with
Triumph genetics to allow a
consistent quality of product. On the
open market Farmland buys from
300 different genetic types, Snyder
says. Companies like Smithfield have
a consistent genetic type.