The Rural Voice, 1991-10, Page 56PERTH +�
County Pork Producers NEWSLETTER
Vince Hulshof, President
R. R. 1, Sebringville, NOK 1X0 393-5586
• The Rural Voice is provided to Perth
County Pork Producers by the PCPPA
CHANGES COMING AT AN ACCELERATING PACE
On September 12, councilmen gathered
in Toro: J for the semi-annual meeting of
the OPPMB. Following are exc-rpts from
the address given by chairman of the board,
Jim Goodhand:
Prices
"When I spoke to you at the annual meet-
ing in March, the theme of my address was
change. At that time, I predicted we would
probably see as much change in the next 10
years as we saw in the last 50. My prediction
stands. Change is taking place at an acceler-
ating rate, and my focus this morning will be
on the steps the Board has taken to manage
that change.
"Perhaps the biggest change has been the
three year decline in the volume of hog
production in Ontario. From a high of 4.6
million hogs in 1988, volume fell to 4.1
million last year. This year it looks like we
will handle around 3.8 million, and we are
predicting about the same level for 1992.
"But while hog production is decreasing
in most provinces in Canada, the United
States is showing significant expansion. It
would appear that U.S. producers have been
making money, while producers here have
not been doing as well. If this is indeed the
case, then something is definitely wrong.
"Part of the problem stems from the
changes that are taking place in the Canadian
packing industry. Five years ago, our big-
gest challenge was the lack of processor ca-
pacity in Ontario. MAPP grants, and a more
aggressive approach by the processors, led to
a major expansion in capacity. Unfortunate-
ly, the processor geared up at the same time
as our volumes began to shrink. Ever since
1988, the Ontario packing industry has been
playing catch-up, but catch-up with declin-
ing numbers.
"In the processing industry, efficiency
— and profitability —means having 90 or 95
per cent utilization of your plant. With hog
volumes declining week by week, this was
impossible, and led to layoffs, plant closings,
and mergers. Low returns and reduced vol-
umes were the prime reason for the amalga-
mation of Olympia and Turcotte and Tur-
mell into Olymel in Quebec. The same is
true here, with the consolidation of Fear -
mans and Hoffmans into a new organization,
Maple Leaf Foods. Hog processing is shift-
ing from Kitchener to Burlington, as Hoff -
mans cuts back to one shift. We will hear
more about the changes brought about by
Maple Leaf Foods this afternoon from Ray
Kingdon.
"With the change in the packing industry
has come a dramatic shift in the flow of hogs
between the provinces. Manitoba continues
52 THE RURAL VOICE
to ship 11,000 carcasses a week into Quebec.
Quebec, once a major importer of live hogs
from Ontario, is now shipping three to four
thousand hogs a week to us, primarily to the
plant in St. Isidore. Even this is changing, as
we learned last week the St. Isidore plant will
close on September 20. Ontario, on the other
hand, is selling three to five thousand hogs a
week into the U.S. The net effect has been to
put further downward pressure on our prices.
"The downward pressure on prices is Ca-
nada wide. To address this and the unusual
movement of hogs and product between the
provinces, the Board met with representa-
tives from the major hog producing provin-
ces on Tuesday and Wednesday of this week.
We wanted to see what we could do differ-
ently. Yesterday moming, we met with rep-
resentatives from the packers across Canada.
Price reporting
"In March, producers indicated they
wanted more information on prices on both
sides of the border. On May 13, the OPPMB
began reporting U.S. prices in terms of
Canadian dollars, dressed weight. To help
producers make a meaningful comparison
with the U.S. average, the board also began
reporting average Ontario prices. The aver-
age was arrived at by rounding Ontario's
average index of 105.2 to 105 and multiply-
ing that by the index 100 price. The board
continued to quote index 100 prices so pro-
ducers would be aware of both.
"We thought that producers would find
this information — a rough average of prices
here and in the U.S. — useful. After three
months, however, it was obvious the new
method of reporting was confusing. There
were just too many numbers. In early Au-
gust, we reverted to just quoting the 100
index price, and U.S. prices in U.S. dollars.
Tripartite review
"Tripartite is now five years old, and the
federal government is doing an extensive
review of the impact and effectiveness of the
program. Their report is expected this win-
ter. The board has been concerned about the
relationship between countervail and tripar-
tite for some time. This spring, for instance,
the board felt that if we lost the appeal on the
countervail on pork, then we would have to
seriously consider scrapping tripartite.
"Even with the win, the question must be
addressed. Tripartite has worked well, and it
did what it was supposed to do. It provided
additional support when it was needed, and it
also helped bring support programs in other
provinces into line. The benefits, however,
may have been more than offset by the
downwards pressure countervail placed on
our prices. However, getting rid of tripartite
will not automatically lead to our having
exactly the same prices as the Americans.
"Tripartite and its impact obviously
needs careful study — and it will get that this
fall. In July, the Canadian Pork Council
committed itself to a complete review of
Tripartite's impact on producers at their
annual meeting in November. The federal
government's report will be available soon
afterwards, so we should be in a much better
position to make sound decisions this winter.
Standing together
"Our industry has gone through major
changes, and obviously there are more to
come. It is a time of challenge, but we have
faced challenges before. After all, we have
a 50 year history of working together to suc-
cessfully overcome obstacles. Our central
auction system, for instance, revolutionized
hog marketing when it was introduced 30
years ago. No one sells market hogs through
sales barns any more. Every province uses a
form of our central auction system, or bases
their price on our price. The Ontario system
became the Canadian standard.
"The auction system served us well, but
times have changed, and so must we. It is a
time to develop a new system —one that will
give us as much of an advantage as the
central auction system did 30 years ago. This
fall at the Regional Meetings, we will be
asking councilmen for their input on what
form that new system should take.
"Whatever we decide, I urge you to re-
member that we will be much further ahead
if we continue to work together as a co-oper-
ative. The retailing sector is becoming in-
creasingly concentrated, and the processors
are becoming fewer and more powerful.
This is not the time for producers to stand
naked and alone."
sts
It is apparent that substantial changes to
our marketing system may take place. The
Marketing Board is involving the 251 coun-
cilmen across Ontario in developing an
improved marketing plan. Producers and
other parts of the pork industry have already
had a chance for input through the "Selling
System Review Committee." One of their
three public meetings was held in Stratford
in mid-August. If producers want to have
further concems expressed or would like
more information, please contact your local
county association.
An oversight
Our apologies to Scheerer Feeds of New-
ton for omitting them as a sponsor of the golf
tournament. The generosity of our sponsors
contributes greatly, and we thank you all.0
by Gordon Jack