The chairman of the Alberta Pork Producers Development Corp. is encouraged by new federal support for the ailing hog industry.
But Herman Simons said it’s probably too early to pass judgement on a trio of initiatives announced by Agriculture Minister Gerry Ritz on Saturday.
The government has pledged $17 million for an international pork marketing fund to help develop new markets for Canadian pork products; it will help arrange long-term, government-backed loans for hog operations seeking to restructure; and it is committing $75 million for a transition program to assist producers seeking to exit the industry.
Details are expected to become available over the next few weeks.
“Ultimately, the delivery of the programs will be the proof on how effective those programs will be,” said Simons, who farms near Tees.
“There’s definitely the potential that it can help out the industry to get through this downturn on the short-term basis.”
Hog producers in Alberta have been hit hard by adverse market conditions that have resulted in steep losses.
The strong loonie has hurt exports, feed costs are high, new country-of-origin labelling requirements in the United States have made Canadian hogs and pork less attractive south of the border, and the H1N1 influenza outbreak has undermined demand for pork.
In Alberta, there has already been a sharp drop in animals numbers. Only about 2.5 million hogs are expected to be processed this year, down a million from just a few years ago.
This has raised concerns that the numbers could drop below the point where it is viable for Olymel to operate its processing plant in Red Deer.
The proposed marketing fund won’t bring immediate relief to the embattled pork industry, noted Simons. And under the loan program, producers will still have to pay principle and interest down the road, which could affect their long-term profitability.
As for the transition program, Simons said it should help reduce supply, which in turn would improve prices for the producers who remain. But a further drop in numbers could also jeopardize the processing industry.
“That’s where it becomes very difficult for us as an industry to really ascertain whether this program is going to be effective or not,” said Simons. “On the one side, we need reduction; on the other side, we need to be able to sustain critical mass.”
The federal support is nonetheless welcome, he said, particularly since it appears the provincial government has done all it is prepared to.
“From an industry perspective, we just hope it’s not too late.”
Simons said there’s something he and his counterpart would prefer to government assistance.
“The best thing that we can see is an increase in the consumption of pork, and preferably Canadian pork.”