Hog sector eyes pricing revamp

Pig producers say it’s time for a hard look at how live animals are priced in Canada


By Alexis Stockford, Manitoba Co-operator

November 13, 2020


Pork producers are looking for a better deal on hog prices.


Following some tough times involving COVID disruptions and issues watching finished pork prices soar while farm gate prices fell, four western Canadian pork producer group boards, the Manitoba Pork Council (MPC) included, met with packers to discuss pricing issues.


Three major Canadian packers were part of those conversations — Olymel, Donalds Fine Foods and Maple Leaf Foods — producers heard during an MPC district meeting in October.


“We met with them just under the premise of having a discussion,” Alberta Pork’s Darcy Fitzgerald said. “It wasn’t to point fingers… just to sit down and look at our industry and talk about how we might go forward. Where are the issues?”


The boards argue that changing pricing formulas would drop volatility for both producer and processor and lead to less reliance on business risk management, better collaboration across the sector on trade and government policy, improved relationships, better collective brand building, quality assurance and room for investment and growth in the hog sector.


Why it matters: Hog producers say current returns on investment, under the current pricing structure, are not sustainable, and that nobody wins if one partner in the value chain isn’t making money.


“We’ve got people who need to get $195 (a hog) in order to break even or even get a return on their investment, and we’ve got others who can survive on $165-$170,” MPC general manager Andrew Dickson said. “But the challenge we’ve got is the cost for replacement of buildings continues to climb — we’re looking at over $600 a finisher place — and if we want expansion, then we’ve got to figure out a return to the producer in raising the pigs from that floor space to pay for that facility, and that dictates how much has to come from the price the producers receive for the pig, and currently, it’s not that attractive to do that.”


Cut-out value ...


Prices based north of the border? ...


Time to look to the East? ...