The Rural Voice, 1995-02, Page 40PERTH iltai
County Pork Producers NEWSLETTER
Harry Bardoel, President
' The Rural Voice is provided to Perth
County Pork Producers by the PCPPA.
Hog prices take an encouraging turn
Any opinions expressed herein may
not necessarily reflect the views of
The Perth County Pork Producers
Association.
As I sit down to write this
newsletter, one can't help but be
encouraged by the recent upward
trend in market hog prices. What is
most encouraging today is the
positive movement in the futures
prices. A hog futures contract is
40,000 lbs. liveweight (approximately
170 pigs). After taking the futures
pricing and adjusting for the basis,
dollar, carcass weight, etc., hog
futures contracts in Canadian
dollars/CWT carcass/100 index
delivered to Ontario plants look
favourable. At the time of writing
(1:00 p.m., January 18, 1995), the
contract prices available were
calculated as follows: April/95,
$140.75; June/95, $160.35; July/95,
$159.15; August/95, $156.20;
October/95, $146.75; December/95,
$150.75; February/96, $153.60.
If contracted in June/95, an 84 kg
carcass at 108 index would gross
$145.45. This is certainly much more
comforting than late this past fall
when the same pig grossed under
$100. At the time of writing, the
average futures contract price for the
last six months of 1995 is
approximately $152/100 index.
How would a new finishing barn
pencil out at $152/100 index? To
determine this, I used the following
parameters and assumptions:
1) 1,000 head, naturally ventilated
barn @ $250,000
2) $200,000 was financed @l0 1/2
per cent, amortized over 10 years
3) a 25 kg weaner cost $61
4) live weight shipped was 104 kg
@ 79 per gent dress and 107 index
5) 1.25 per cent mortality
6) Trucking & Marketing costs/pig
of $4.50
7) Variable Expenses/pig of $3.50
(Vet, Health, Taxes and Insurance,
Utilities, Repair and Maintenance,
Manure Removal and Misc.)
8) Feed Cost/pig of $47
9) Weaner pigs and feed were
financed at 9 1/2 per cent ($2.75/pig)
10) 3.35 Barn Tumovers/year
After all expenses and payments,
the return to labour per pig shipped is
$7.43, or $24,000/year. A required
contract rate equivalent for a similar
net return would be over $20/pig.
On Friday, January 13, I had the
opportunity to travel with the PCPPA
Executive and Communication
committees to meet with Lindsay
Barfoot and Nancy Brown -Anderson
of Price Waterhouse. The meeting
was to address some concerns some
Perth County producers had with a
few of the recommendations Price
Waterhouse had in their Operational
Review of Ontario Pork. Lindsay is
the acting CEO of Ontario Pork.
I believe the time spent was
beneficial to both parties. We may
not all agree with the severity of the
comments or recommendations made
by Price Waterhouse, but I for one
was impressed with the professional,
aggressive "determination" they
exhibited for instilling their ideas to
unify and improve the direction and
services of Ontario Pork.
Price Waterhouse concluded that
Ontario Pork must make fundamental
changes in many aspects of its
operations, and that it would take
"courage" to implement the required
actions and decisions. Price
Waterhouse's strategy is five-part:
1) Shift from producer focus to
industry focus
2) Shift from a paternalistic approach
to an independence approach
3) Re -invention of co-operative
methods
4) Recognition of producers as
stakeholders and packers as customers
5) Improve staff efficiency
Price Waterhouse was challenged
on recommendation #18, which was
to "contract with Price Waterhouse to
manage the implementation of
recommendations and invoke
change". Their response to this
challenge was straightforward. Their
low-risk option after the first 17
recommendations would have been to
say "good luck" to the Pork Producers
of Ontario. Price Waterhouse opted to
stand behind their recommendations
and to help Ontario Pork implement
them.0
Pork Products
available from:
Fred DeMartines
at 393-6812
Martin VanBakel
at 345-2666
Dennis Zehr
at 595-4771
ANNOUNCEMENT:
PCPPA & HCPPA ANNUAL CURLING BONSPIEL
Exeter Curling Club February 4, 1995
$60 per rink Contact Mike Zurbrigg, 284-2079
FEBRUARY 1995 37