The mood was sombre at Alberta Pork’s fall regional meeting in Red Deer on Wednesday — with good reason.
Producers’ income statements continue to bleed red, with low prices translating into losses on every pig sold.
“We’re basically challenged for survival, whether you’re talking production sector, processing sector or what have you,” Alberta Pork chairman Jim Haggins told producers at the Capri Centre meeting.
He described how the sector has lost millions of dollars in recent years, with improved prices to start 2010 subsequently plummeting.
“Small profits of $5 to $10 (per animal), maybe $15 in some cases, through the summer have basically been sucked up and disappeared in the last four weeks with the dramatic fall in the market that we’ve experienced.”
More and more Alberta producers are leaving the industry or scaling back, added Haggins.
Their numbers have dwindled from about 1,300 in 2003 to the current 380. Perhaps more disconcerting is the decline in the provincial sow herd, from around 200,000 in 2006 to 137,000 — and continuing to drop — now.
“If we take away the exported feeder pigs and isoweans that go to the U.S., we end up with about 2.44 million pigs total available to our federal and provincial processors in the province, and processors outside the province that buy Alberta pigs.”
That works out to about 47,000 animals a week — well below the 60,000 needed to keep Alberta’s plants operating at their single-shift capacity.
“That inefficient industry is costing each and every one of us,” said Haggins.
He pointed out that Canadian pork producers receive lower prices than their counterparts elsewhere in the world, including the United States.
This, despite the fact Alberta packers are nearer West Coast shipping points than their competitors in the U.S. Midwest.
“Our pricing formulas must be adjusted,” said Haggins, arguing that these currently favour the packers.
“If our industry is going to survive and prosper, we’ve got to recover more money than we are now. There’s just no future in this industry, unfortunately, if we continue to lose money week after week, year after year.”
Don Brookbank, acquisition manager for Olymel in Red Deer, defended his plant.
“We feel just as terrible as you do about today’s price, but it is what it is,” he said.
“Unfortunately, with 2.3 million pigs a week being slaughtered in the U.S., it’s taken that price down.”
Brookbank added that Olymel needs pork production in Alberta to remain high if its Red Deer plant is to remain viable.
Haggins and Alberta Pork executive director Darcy Fitzgerald listed the measures their organization has taken to cut costs, with its 2010 budget $628,000 lower than the $3,018,000 it spent in 2009.
Alberta Pork closed its Consumer Services office in Calgary on Aug. 31 and is now pushing for a reduction in the levy it collects from producers — from $1 per slaughter hog to 85 cents.
Other strategies include improving communications with consumers, reducing production costs, seeking tariffs on imported pork and working with packers to improve producer margins.
Earlier this week, Alberta Pork directors spoke with Alberta’s deputy agriculture minister John Knapp and officials with Agriculture Financial Services Corp. about the crisis their industry faces, said Haggins. Knapp proposed the creation of a small group to consider options.
“It was emphasized there has to be some kind of quick support from somewhere, just to maintain our base right now and get us through to spring, when hopefully 2011 will be our year of recovery,” said Haggins.
Will Kingma, a director with Alberta Pork who farms near Bentley, offered a glimmer of hope.
He noted that global protein consumption is expected to rise as developing countries become more affluent and the world’s population grows.
“I think if you get out there five or 15 years, Canada is really positioned in a good spot. The challenge is getting there.”