Cattlemen seek relief

Ayr cattleman John Gillespie is looking for "a groundswell of support" for an enhancement of the province's farm relief program.

As it stands, the program, launched last fall to help hard-pressed pork and cash crop farmers suffering through a drastic price collapse, will do little for the province's beef industry, which has suffered through a long and crippling downturn.

Cattle prices bottomed in 1996, and there was no program then, says Gillespie, Waterloo county director to the Ontario Cattlemen's Association.

The National Tripartite Stabilization Program ended in 1995, and cow-calf producers who'd paid into it for more than a decade never received a payout, he says.

Like other cattle feeders, Gillespie fears that the calves needed to fill their yards will be in short supply when the beef market starts to turn around again.

Gillespie says the national relief program appears to have been copied from Alberta, which apparently has had a support program since 1995. A press release issued by the Alberta government on Feb. 24 boasts that the national program is indeed based on the Alberta plan, and that the province has paid out $180 million to its farmers in the last three years, with another $100 million likely to be paid for the last tax year.

"This is difficult to accept," Gillespie says. Alberta beef producers "portray themselves as the last bastion of free enterprise" at the same time as they are cashing cheques from the provincial treasury, he charges.

Gillespie is looking for support for the concept of backdating the Ontario program so that the cash-poor years of 1996 will get more weight as returns are averaged. A resolution supporting an enhanced program passed with strong support at the Ontario Cattlemen's Association annual meeting in February.

Gillespie isn't concerned about increasing the threat of a countervail from the U.S. "We all have emphasized that...this be WTO friendly," Gillespie says. He says that as he understands it, "the Ontario plan rules aren't written in stone."

Alberta Agriculture describes its Farm Income Disaster Program (FIDP) as a "whole farm" program for all agricultural commodities.

Under the Alberta program, a farm could be eligible for a FIDP payment if its 1998 annual net margin (the difference between allowable revenue and expenses) falls below 70 per cent of the average for the previous three years. There is no premium to pay; a $50 application fee is required. Farmers have to include information from their 1998 income tax return (and the previous three years), so they must have their 1998 income tax submitted.

Under its FIDP, the Alberta government pays 100 per cent of the first $50,000 loss (below the 70 per cent of the previous three-year average threshold) and 50 per cent of the next $100,000 loss, to a maximum of $100,000 for the 1998 taxation year per farm in the case of a single proprietor. In the case of corporations or partnerships, the limits are $100,000 per shareholder or partner, up to a maximum of five people per farm.

Harry Danford, an eastern Ontario MPP and legislative assistant to Agriculture Minister Noble Villeneuve, says it is unlikely that the provincial program will be changed, as it is based on the federal program.

Nor is there room in the program to cover negative margins, or losses beyond cash costs. "It's not what the program was designed for," Danford says, and most of the benefit under the national scheme would go to hard-hit Saskatchewan anyway. - Don Stoneman

© copyright 1999 Agricultural Publishing Company Limited.


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Cuts stagger but can't kill OSI

BY ROBERT IRWIN

Ontario Swine Improvement (OSI) lost a whopping $469,993 during a nine-month period ending Dec. 31, 1999. That loss still left reserves of $1.8 million, and it came as no surprise to most attending the Guelph-based organization's recent annual meeting in Toronto.

Last summer, OMAFRA drew the ire of OSI directors and management when it suddenly cut about $400,000 funding for the group, which had assumed many of the tasks formerly done by ministry staff.

Nevertheless, OSI directors vowed to use money from reserves to maintain programs already budgeted for, in its efforts to help the Ontario pork industry achieve world class excellence.

One current project includes an evaluation of growth and carcass characteristics of terminal sire lines. Due for completion in 1999, it was carried out in collaboration with Ontario Pork, Ridgetown College and the Canadian Meat Council.

Several studies on meat quality are underway. OSI is also funding two projects using genetic markers and a University of Guelph project aimed at producing an environmentally friendly pig that excretes less phosphorus.

OSI chairman Jim Whitehouse estimates remaining reserves would allow the organization to survive "in its present form, another two to three years."

"You're going to have to make ends meet somehow," warned hybrid gilt breeder Rein Minnema, Appin, one of only a handful of breeders attending the meeting.

Fellow breeders Joe Kolkman (Monkton) and Robert Matheson (Embro) echoed Minnema's comments. Breeders pay a portion of the cost of having animals performance tested by OSI.

They use the information to plan matings and improve the genetic quality of their herds. Many also use the testing program, which is still supported by more than $500,000 in government funding, as a marketing tool as well.

"I might as well quit now if it's going to be gone," Kolkman, a member of the popular Swine Genetics Ontario breeders group, told OSI directors. "There will always be a testing program," Whitehouse explained, adding he's had assurances OMAFRA remains committed to swine testing.

As recently as October, according to reports by general manager Henry deWolde, OSI's new artificial insemination unit was actually showing a profit. Despite record low pork prices, the new unit, which opened last year, generated $517,872, placing it about two years ahead of its business plan projection.

Price reductions and prompt payment discounts as well as an aggressive turnover of boars in the stud have proven popular with cash-strapped producers still anxious to maintain genetic excellence.

Pens devoted to custom collection and housing for privately-owned boars are almost all in use, too, Whitehouse revealed. OSI isn't the only organization providing the so-called rent-a-pen service, nor is it the cheapest, but private boar owners trust the publicly owned stud.

Whitehouse said the idea of a national nucleus herd, "is probably dead." The plan was spearheaded by Jacques Chesnais, general manager, Canadian Centre for Swine Improvement, the national umbrella group for OSI and its counterparts in other regions.

The idea was to bring breeders across Canada into a mega genetics-sharing alliance that proponents predicted would give independent breeders a competitive edge against large multi-national breeding stock suppliers. Last summer, 11 prominent Ontario breeders were poised to ante up.

Disastrous pork prices and a subsequent business plan that showed higher costs than expected torpedoed the idea.

Whitehouse, who runs Pureline Swine, a Guelph-based seedstock development company, noted it would have cost Pureline about $12,000 to put 140 litters through the program. That's in addition to existing OSI fees. "I wasn't going to get $10,000 or 12,000 out of it," he concluded.

Still, breeders "are going to have to work together better than we have in the past," Whitehouse maintained. He suggests smaller alliances and exchanges of genetic material may be easier than a large politically unwieldy organization that is difficult "to get our heads around."

© copyright 1999 Agricultural Publishing Company Limited.


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Countervail a killer for Perras plan

The Ontario Pork Producers Marketing Board annual meeting in Toronto last month marked the end of the line for Robert Perras' odyssey. His resolution was lost in just a few minutes with little comment from the delegate body, after he spent dozens of hours on the phone and thousands of kilometres driven and flown in support of an idea whose time apparently had not come.

Since pork prices crashed last November, the 20-year veteran farrow-to-finisher who farms at Hammond a few miles from the Quebec border had paid for extra help in his barn to free him for appearances at distant county pork producer meetings.

He contacted industry and government leaders and led a delegation to Quebec, all to obtain a pork stabilization program for Ontario. The mild mannered, born-again Christian, with no history of activism, says he simply wanted to show fellow Ontario producers how their industry could prosper as Quebec's has.

"I'm disappointed, but I don't have any grudges. We're all partners in this industry," Perras told Farm & Country following defeat of his brain child, a resolution, submitted by Stormont Dundas and Russell, Glengarry and Prescott Pork Producers Associations, which called for "establishment of an Ontario hog income insurance program."

Ontario Pork vice-chairman Clare Schlegel declared the resolution lost by a show of hands. Perras noted no count was taken and concludes, "it wouldn't have taken much to have swayed it either way."

He also observed the resolution was brought up late in the day when some supporters had already left, and remaining delegates were more interested in winding up the meeting.

In the end, it was probably the C word that doomed Perras' initiative. "The fear of countervail is still there," he conceded.

Producers needed little reminding of the ill-fated tripartite stabilization program abandoned after the U.S. government used it as justification for a series of costly countervailing duties against Canadian hog exports. The duties ceased in April 1997, but the Canadian industry is still lobbying to have the enabling U.S. legislation removed.

Strong opposition to the stabilization resolution came from Mary-Ann Hendrikx, pork board director from Middlesex county. She warned delegates "the grass looks greener in another province. The more subsidy we get, the less packers will pay for our pigs."

So is stabilization finished in Ontario? Perras predicts all existing farm programs will be up for review as the next World Trade Organization session approaches.

"The pork board will have no choice but to review some kind of stabilization in 1999," Perras insists. - Robert Irwin

© copyright 1999 Agricultural Publishing Company Limited.


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Small outfits need new partners

When it comes to pork production "the family farm isn't getting the job done," according to Dr. Chris Hurt, professor of economics, Purdue University. He also says hogs that once had a reputation as "mortgage lifters now have a reputation as mortgage makers."

Hurt concludes families must surround themselves with new supporting structures to ensure access to technology, markets and information. "Independence is not sustainable," he insists.

Feed conversions on smaller farms average around four pounds of feed per pound of gain compared with three to one on corporate farms, Hurt points out. Furthermore, smaller farms are averaging only 16 pigs weaned; carcass quality, which could generate a $4 premium, is lacking, too, he says.

In the U.S., Hurt estimates, farms with less than 200 sows will continue to leave the industry until 2005. Those leaving represent about three per cent, which together with a one per cent population growth provide an opportunity for the U.S. industry to expand by about four per cent each year.

He says "pork systems" and "greater co-ordination" are keys to keeping small operations viable. Co-ordination allows risk sharing and stabilized incomes, providing a framework for locating capital for expansion and modernization and ensuring producers have market access.

One category - "independent market co-ordinated" - simply pulls independent producers and packers together with a contract. A category Hurt labels "independent active co-ordinated" requires producer alliances and family farm co-operatives and corporations.

"Input co-ordinated" includes veterinary clinics, feed companies, regional co-operatives and genetics companies. Integrated co-ordination occurs when a production entity is owned by a feed company, a mega producer-packer or total vertical integration.

Hurt predicts the U.S. breeding herd will shrink in the next three quarters, with the smallest number of farrowings occuring first or second quarter 2000, which suggests prices will peak in summer or fall of that year. - Robert Irwin

© copyright 1999 Agricultural Publishing Company Limited.


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Cross-border counterparts speak out

Low prices and shackle shortage will always affect live hog export picture

Early last fall the Canadian Pork Council began lobbying for a national farm income-disaster program. Speaking to delegates at the Ontario Pork annual meeting last month in Toronto, CPC chairman Edouard Asnong conceded the program has fallen short in areas such as coverage of negative margins.

However, Asnong stressed the program met many of CPC's goals, including "being whole-farm and consistent with World Trade Organization principles for farm income-disaster programs." This means it can't be used by countries like the U.S. to keep Canadian hogs out.

Nevertheless, Asnong, who finishes 4,500 hogs annually near Pike River, Quebec, about 100 km southeast of Montreal, warned live exports will always be vulnerable to protectionist sentiments whenever hog prices turn down. He recalled strikes at three Canadian packing plants during 1998 boosted live hog exports to the U.S., straining relations between CPC and its U.S. counterpart, the National Pork Producers Council.

"It's not only Quebecers who can block highways," Asnong quipped. The previous evening NPPC president Donna Reifschneider had told delegates NPPC was overwhelmed by 4.1 million Canadian hogs that hadn't been considered when U.S. packer capacity was calculated.

Reifschneider says U.S. producers lost $9 per hundred pounds "for every 100,000 in the system when we hit capacity."

She had high marks for the relationship between CPC and NPPC and was optimistic about its future despite recent state producer meetings that, she observed, were contentious and generated "some resolutions pertaining to Canada."

Reifschneider explained U.S. producers are still going out of business, "because we don't have the options that you have in Ontario." Nevertheless, she suggested increased U.S. expansion is likely.

Asnong predicted prices would be "well below those experienced in 1996 and 1997." Canada will also be challenged by non-tariff trade barriers such as exaggerated phyto sanitary regulations, he predicted.

"Each country can find a scientist to say what they want him to say," Asnong explained.

He predicted CPC initiatives like the Canadian Quality Assurance Program, aimed at enhancing product image with foreign buyers, will "help Canadian hog farmers respond to the longer term pressures." - Robert Irwin

© copyright 1999 Agricultural Publishing Company Limited.


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