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The Rural Voice, 2000-06, Page 65PERTH ifRk County Pork Producers NEWSLETTER Jim Van Herk, President 519-595-4863 • The Rural Voice is provided to Perth County Pork Producers by the PCPPA. How can we sustain a healthy pork industry? Any opinions expressed herein may not necessarily reflect the views of the Perth County Pork Producers' Association. Pork producers must be somewhat relieved that the hog price has dramatically improved so they can recoup some of the losses of the past two years. Will this wild ride of hog prices ever level out somewhat? Is the hog price cycle alive and well or will it swing more widely. According to an article by Brian Doidge, we will see larger and less predictable swings in production; extended periods of over -supply and greatly volatility for non -contract commodities. The hog price cycle does mess up a processors' need for a steady supply of hogs when hog producers cut back in response to low prices. Can you blame them? Producers won't go on forever producing hogs at low to non-existent profit margins. Likewise neither will the processors continue to slaughter hogs when they are losing money, although they should have built up quite a reserve of capital after making record profits for a couple of years. Processors are finding it increasingly difficult to capture some of the added value by further processing their meat. Retail chains here don't want to give up cutting and wrapping. They make too much money at it to give this up willingly. There is more packer brand name penetration in the U.S. than Canada. Morrison Meats has shut their doors to slaughtering hogs and is up for sale. Ron Dancy has chosen to sell at the beginning of the upturn in hog prices. This week Maple Leaf has gone to a four-day slaughter week. Quality Meats has reduced slaughter to 20,500 per week. At the same time I read a report that Canadian hog production is increasing so it will only be a matter of time before there will be an over- supply of hogs and the price will fall again. In 1998, Canadian Swine Forum published a paper that said that the spread between what the retail sector sold pork for and what the hog producer received for their hogs was widening. Former Federal Agriculture Minister Ralph Ferguson released an updated version of "Compare the Share" in February of 2000. It showed the same thing. The retailer's share of the food dollar was steadily increasing and moving further away from the value received by the processors and hog producers. It showed the processor's share as increasingly modestly and that the farmer's share was virtually a flat line over that last 15 years. Ralph Ferguson came under heavy criticism from the retail sector after the release of his first "Compare the Share" in the mid-1980s. The retail sector argued that the study did not take into account the use of new technology which allowed for greater production per farmer. Well the same could also be argued against the retail sector. Look at the modern mega - grocery stores being built today. Ralph Ferguson is a staunch supporter of marketing boards. There are only three major food retail buying groups in Canada. There is more competition in the U.S. among retailers. The National Cost Base price is derived from a shrinking spot market. Establishing a new base price for hogs, perhaps one that would be derived from the retail value of a hog carcass could prove to be difficult. I have heard Vincent Amanor-Boadu of the George Morris Centre, speak twice now. He talks of the need to establish a supply chain where all partners share the profit by forming strategic alliances. For this to work the retailers, processors and hog producers would have to get together and sit around a table to hammer out the details, but since the retailers receive the lion's share of the food dollar now, what incentive is there for them to come to the table? Perhaps setting a base price from the USDA would be more attainable in the near future. The USDA publishes, on a regular basis, what the primal cuts of meat are bringing in the marketplace. This would be a wholesale price derived from a large volume of meat. This information is published and available for use. The new mandatory price reporting legislation is now the law in the U.S. This reported wholesale price could be used to derive a new base price. To ensure that the processor and the hog producer remain in business and make a reasonable profit should be a goal to work towards. A marketing board could ensure fairness among all hog producers. By representing all hog producers and with the support of government; it would have enough strength to negotiate for a new base price that fairly sets the price for hQgs.O — Submitted by Gerald H. Kollanan 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: Steve Hulshof (Kinkora) 348-8167 Martin van Bakel (Dublin) 345-2666 Walter Bosch (Monkton) 356-9000 Ted Keller (Mitchell) ..348-9836 JUNE 2000 61