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The Rural Voice, 2006-11, Page 57PERTH Volk County Pork Producers NEWSLETTER Pork production competitiveness: a Any opinions expressed herein may not necessarily reflect the views of the Perth County Pork Producers' Association. The last two years have provided many challenges for agriculture and pork production specifically. Depending on whom you ask, labour relations, weather, bank loans, packer contracts and diseases such as circovirus may rank high on the list of pork producers' challenges. However, the issue that has caused and will continue to cause the most stress has been the Canadian dollar's astronomical increase in value in a relatively short period of time. The new paradigm for Canadian pork production is that the average price that we can expect to receive for raising a market hog has been reduced by over $20 per animal. This means that Ontario Pork Producers will receive on . average approximately $1 15 million less for the animals they produce in 2006 than they would have received for the same animals in 2004. This Toss is a direct result of the exchange rate between the Canadian and U.S. dollar since the price Canadian farmers receive for their hog is based upon the U.S. market price converted into Canadian dollars. Although certain costs such as feed, which is also based on U.S. currency has reduced which helps offset the loss, a large discrepancy still exists. The costs associated with raising pigs such as barns, land, labour and medication have not reduced relative to the increase in the value of our currency. In fact many of these costs such as housing cannot be reduced. The barns and the land upon which they were built were purchased based upon income from a $0.65 exchange rate and the loans must now be paid back with income from a $0.90 exchange rate. This problem is so severe that it prompted Michael McCain to speak about it repeatedly at the annual signature pork producers meeting Russ Danbrook, President 519-356-2385 The Rural Voice is provided to Perth County Pork Producers by the PCPPA. new paradigm for the next decade? large both last year and this year. He has cited the exchange rate as the reason why Mapleleaf has not been profitable. He also stated that efficiencies of $10 per hog at the packer level and $20 per hog at the farm level needs to be found in order for the Canadian pork industry to remain competitive with our American counterparts. It appears that Mapleleaf has formed a strategy to meet these efficiencies. In the next three years, they plan to streamline operations by concentrating production, feeding and packing in western Canada. Furthermore, they plan on selling or closing their less efficient farms, feed mills and packing plants and focus on further processing. The details are still to be announced, but the general feeling is that the packing plant here in Burlington may be closed or sold off. As a pork producer who has been selling hogs to Mapleleaf for nearly ten years, my initial reaction was one of shock and betrayal. Our partner in pork production appears to be leaving; this at a time when pork producers are already being pummeled by low prices and high costs. The reality is that if Mapleleaf closes its doors at Burlington, it will cost Ontario producers another $40 million annually, just to truck these hogs into U.S. markets. In addition, the price received per hog may also be reduced as the local remaining packers would be flooded with an excessive number of hogs and therefore not feel pressure to pay a U.S. equivalent price. A great challenge lies ahead for Ontario Pork and the producers they represent. However, a great opportunity may also lie ahead. One option that should be considered is building a new state of the art packing plant here in Ontario. This plant is necessary for the success of all producers. But who will build it? Similar to a plant built in Denmark by a cooperative called Danish Crown; a plant using robotics. double shifting etc. should be built. Either in partnership with a large processor or on our own. Ontario Producers have the opportunity to build their future. The efficiencies are endless: current staff at Ontario Pork could be used for marketing pork rather than pigs; logistics, and settlements are areas in which they already excel. No longer would trucking costs associated with moving live hogs to the U.S., or the risk of tariffs and countervail be prohibitive. Surely. the provincial and federal government would help us become self-sufficient (they recently each gave Ford Motor Company $100 million to retool the Oakville assemble plant). We would be value - adding, keeping jobs in Ontario. No doubt, a new efficient plant would be expensive. We have invested a great deal of money in our farms and have seen the efficiency gains of automation and new buildings. This same investment now needs to be made by someone in the further processing of the hogs that leave our farms. Are we up to the task? In the next decade. what will the pork production paradigm look like in Ontario?0 — Submitted by David Vandewalle 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 Walter Bosch (Monkton)356-9000 Ted Keller (Mitchell) 348-9836 NOVEMBER 2006 53