The Rural Voice, 1991-09, Page 531
NEWS
STUDY ON HOG MARKETING BEING DONE
AS OPPMB MARKS 50TH: IS IT IN DANGER OF DISINTEGRATION?
by Bob Reid
As the Ontario Pork Producers'
Marketing Board (OPPMB) marks its
50th anniversary this year, it remains to
be seen whether it will be a time of
celebration or disintegration.
There is talk of change in this sector
of agriculture which has already seen
considerable change over the past 50
years, most of it for the better. But many
are not sure if that is the case this time.
In May, a nine -person committee
was appointed to examine the way hogs
in Ontario are marketed. This group
consists of three OPPMB directors,
three member producers, and three staff
from the OPPMB, who will examine,
among other things, if the board should
even exist. Many larger producers are
beginning to believe it should not, and
that they can do better by dealing
directly with the packing plants.
"It is probably a good time to look at
the system," suggests John Lichti
chairman of the committee and OPPMB
director from Perth County . While ack-
nowledging there is a danger in splitting
the industry down the middle between
large and small producers, he also point-
ed out it is a good opportunity to take a
self-evaluation, and not be afraid of
change.
The system may need refining rather
than dismantling, although that is an
option, he said. There is also the chance
that the industry could take a step back-
ward by trying to re -invent the wheel.
Lichti recalls being at a meeting this
summer where one younger farmer
suggested the board should be
dismantled and the truckers take
responsibility for delivering pigs to the
packing plants directly from the farm
gate. An older farmer replied, "We went
through the pain and agony of putting
the system in place, and don't want to go
back to that again."
What the older farmer was referring
to was prior to 1953 when selling hogs
through a central desk at the Toronto
stockyard was instituted. Other yards
were later established across the
province at strategic locations,
eliminating the need for truckers to
locate the hogs for the packers, haggle to
establish a price, and then deliver them
to the plants.
Hog producers were given the au-
thority to arrange their own marketing
scheme in 1946 by the Ontario govern-
ment. Implementing an orderly system,
and obtaining the best price possible,
were two of the first objectives. Later
developments such as carcass indexing
(1969) and the Dutch auction which
electronically connected the buyers at
the packing plants to the yards, brought
more equity to the industry.
Producer numbers plunge
But now there are far fewer hog
producers in the province — 9,600
compared to 121,349 in 1941— selling
4.1 million hogs compared to two
million hogs 50 years ago. These hogs
are collected at 40 yards, which cost $2
million per year to maintain. Some
larger producers, who may ship several
hundred hogs per week, are questioning
the expense, as it makes up one quarter
of the $2 checkoff placed on each animal
sold through the board. They see less
players involved translating into less
ways to divide the already slim profits in
the hog business.
Hog prices in early August hovered
around $159 per 100 kilograms, down
from $190 at the same time last year.
A downsizing in the number of
truckers has already taken place with W.
Thur and Sons Ltd., an Elmira trucking
firm, trying to negotiate a deal in July
with Canada Packers (Maple Leaf
Foods) for exclusive trucking rights to
their two plants. That move mirrors the
erosion in the number of pork producers
and possibly an attempt by those left to
take matters into their own hands.
Truckers will be consulted by the
committee during the information
gathering process.
"There is a risk, if you dismantle the
system, for the smaller producers,"
admits Lichti, adding there is also some
risk to the industry itself. One of the past
strengths has been the numbers of
smaller producers involved that have
helped shape and stabilize the industry.
But in any case, the price of hogs is
not determined within Ontario's border.
Hogs are sold here based on a North
American market with prices
established out of cities like Chicago
and Omaha. This inevitably leads to a
comparison of selling methods south of
the border where the attitude is "every
man for himself."
"There is a general misunder-
standing as to how the U.S. system
works," says Lichti. "There is a 'grass -
is -greener -on -the -other -side- of -the -
fence' mentality."
He adds it is much harder to establish
what the price is there because it starts at
the top end of the market and goes down,
whereas here, it works almost the
opposite, establishing what the average
index or average pig price is, and
working from there.
"Ontario farmers see what their
American counterparts are paid and
think they are getting a bad deal. But
when the hogs from Ontario are
exported into that market — averaging
around 2,000 per week this past year —
the price here has to be less to make up
for various costs, such as
transportation," says Lichti. Also, there
are hidden marketing costs between
packers and producers in the U.S. that
arc not easily identified, along with the
confusion of the difference in the
exchange dollar.
Ontario barely self-sufficient
Currently, Ontario is barely self-
sufficient in pork production, but that
can vary either way with the volatile
production patterns over the past few
years. Weekly numbers shipped are
down by 20,000 from last year to
70,000, so packers, needing volume to
operate efficiently, would Tike to see
more pigs. "But the farmers' answer to
that is pay more, and we will produce
more," Lichti says.
Discontentment over a lower market
price, real or perceived, has led to this
study, says Lichti, which he hopes will
produce some answers when a report is
submitted this winter. An interim report
SEPTEMBER 1991 49