URGENT COMMUNIQUE
Updated January 5, 1999
See text in blue for the latest information.
Recent Activities and Initiatives Undertaken by Ontario Pork
Quality Meat Packers Strike
Negotiations are ongoing but limited information is being released to Ontario Pork or the public
Discussions with the Ministry of Labour gave clear direction to Ontario Pork that legislating back to work is not an option
Ontario Pork believes forcing workers back to their jobs could compromise quality due to the possibility of sabotage.
"If workers were forced back to work, Quality Meats would have a work force without a work ethic," says Will Nap, Chair of Ontario Pork.
Trade Issues
Will Nap will meet this week with the NPPC and the CPC to discuss the current financial crisis in the hog industry and to inform the NPPC on the Quality strike and the resulting impact to our market.
Hog Shipping
Ontario Pork is shipping to any destination in North America that will take Ontario’s hogs with consideration given to cost effectiveness
Currently, Ontario Pork is selling hogs to 5 plants it has never done business with before
Shipments from producers’ farms are being organized in a rotating fashion and producers can expect to move approximately 75% of the numbers they would under normal circumstances. Ontario Pork staff is doing everything possible to keep these numbers from slipping further.
Transportation companies never before used are hauling Ontario hogs. Trucks from western provinces and Quebec are being used to back haul hogs to plants at extremely cost-effective rates, given the distances.
Meetings with Industry Stakeholders
December 30, 1998 - Board met to determine if they should proceed with plans for the Serecon study and determine a marketing solution for Ontario or to delay the decision until the current price crisis has concluded.
The Board’s position is that the current financial crisis is paramount to all producers and their efforts should continue to be concentrating on these activities and to seek the best possible returns for the producers of the province.
While the Board will concentrate on the financial crisis, they have decided on a marketing direction to pursue and have directed the staff to finalize the details to the marketing concept. Details of the marketing plan will be discussed at the County Annual Meetings in January and February.
The Board will also develop a long-term strategy to minimize the risk of any future occurrences of this magnitude to the hog prices.
Dec. 23, 1998 - The Board of Directors met via teleconference today to discuss current activities on the issues challenging our industry. The Board has decided to move forward on pressuring MPP’s to support covering negative margins as part of the Whole Farm Income Disaster Relief Program.
December 22, 1998 and January 4, 1999 – tele-conference call with Presidents and secretaries. Unanimous support for Ontario Pork to proceed with a provincial loan program.
In December Ontario Pork met with representatives of the Ontario Grain and Feed Association, the Ontario Swine Practitioner’s Association, the Ontario Farm Animal Council, several banks and transporters to discuss what could be done to alleviate some of the stresses imposed on your industry due to the current price crisis. Stakeholders were updated on recent and ongoing initiatives undertaken by Ontario Pork.
Crisis Update
Independent lobbying actions, acts of civil disobedience and other acts of protest are being kept to a minimum. Ontario Pork encourages all pork producers to use whatever powers of persuasion they have with their peers to discourage any irresponsible activities.
Whole Farm Income Disaster Relief Program
Negative Gross Margins Defined
In rough terms, gross margin equals your revenues less your eligible expenses. To determine eligible expenses, you must take total expenses and subtract rent, interest, wages, property taxes, and capital cost allowance. Gross margin represents the amount of money that remains to:
- pay the bank
- pay salaries
- pay yourself and other partners
How to calculate gross margin:
| Total Receipts: (A) | $251,172 | |
| Total Expenses: | $318,790 | |
| Less: | Depreciation | $35,000 |
| Property Taxes | $3,482 | |
| Wage | $21,053 | |
| Interest | $29,493 | |
| Rent | $7,063 | |
| Total Eligible Expenses: (B) | $222,699 | |
| Gross Margin: (A-B) | $28,473 | |
All references to negative margins with respect to the disaster relief program refer to the final value being in the negative position. Ontario Pork believes the program should cover negative margins.
Some adjustments will be made to account for inventory changes, deferred income, accounts payables / receivables and changes in scale of operation. Some points still require clarification.
Ontario Pork and other industry stakeholders anticipate that the program will offer coverage to raise the current year’s gross margins to 70% of the previous 3-year average gross margins of an individual’s farm.
What can you do? . . . What can you do? . . . What can you do?
Complete the OMAFRA WHOLE FARM INCOME template posted on OMAFRA’s website or www:ontariopork.on.ca and estimate if your operation will trigger a payment and how much?
Advise the Board if your operation is covered and if not why? We need to know this information to advise the government and to provide feedback on the program.
Every producer should contact his local MPP to stress how important it is that the Whole Farm Income Disaster Relief Program cover negative margins. For an explanation of negative margins, please see above. There has been some discussions within the government that the program should not cover negative margins, but rather only the difference from 0 to 70% of the 3-year historical average. While talking with your MPP, also drive home the message that relief funds must come quickly. Specifically, interim payments must be in the hands of producers BEFORE the end of the first quarter of 1999.
Call Ontario Pork and ask for your assigned PIN for the secure web site. Every producer with access to the internet will find invaluable information at this site relevant to the current issues facing the industry. This site contains information that may be inappropriate to be viewed by the public at large but should be available to producers.
Encourage your colleagues and peers in the industry to allow Ontario Pork to take a leadership role in this crisis.
In-Transit Loss Account (ITLA)
Secure Website information
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