AMERICANS AT IT AGAIN
By DON STONEMAN
The Americans are off to a slow start investigating Canada's whopping beef trade with their nation.The International Trade Commission announced its intention to investigate the impact of North American free trade and the GATT Uruguay Round agreements on the U.S. cattle industry in early October. There still had been no commissioners named a month later. Dennis Laycraft, general manager, Canadian Cattlemen's Association, thinks there will be more action with the U.S. election over. A hearing is scheduled for Washington, DC, March 20. He is confident that Canada has good legal counsel in Washington to deal with the trade issue. It has been only five years since the Americans last investigated the Canadian beef industry.
The International Trade Commission is due to complete its report in early July.
If Alberta cattle producers are concerned about the U.S. investigation of beef trade with Canada next year, their leaders aren't showing it.
Alberta produces the lion's share of Canada's beef, and exports much of it south to the U.S., both as live cattle and as boxed beef. But in spite of criticism from elsewhere in Canada, programs there are less rich than in other provinces and shouldn't alarm U.S. trade investigators, says Gary Sargeant, general manager, Alberta Cattle Commission. Alberta's equivalent of Net Income Stabilization Account (NISA) is called the Farm Income Disaster Program (FIDP). The whole farm income program doesn't kick in until a farm's income falls to 70 per cent of the average of the previous three years. The name of the program was changed recently to reflect the fact that it is a disaster program, not a stabilization program. At 70 per cent "it isn't stabilizing anything," says Sargeant. "It's just helping someone to stay around."
Last month, in the House of Commons, NDP MP Len Taylor criticized the Alberta program, calling it "an adhoc program subsidy program which has caused that province to be called the Europeans of the cattle industry."
Sargeant says he has never heard that before, and asserts there were no big payments to feedlots last year even though cattle prices were poor. The most financially stressed part of the beef industry was cow-calf producers who weren't growing their own grain.
Lloyd Andruchow, head of the program development and evaluation with Alberta Agriculture, Food and Rural Development, says Alberta farmers made out 6,000 applications under FIDP, based on their 1995 tax year. So far, only 2,500 have been dealt with. The bulk of applications were from northeastern Alberta, where both grain crops and pastures were hard-hit by drought last year, Andruchow says.
Most farms in Alberta are highly diversified, with the exception of some big feedlot operations. And even they grow grain as well, so they are covered for income on that side. "We very carefully designed that program within the GATT rules," Andruchow says. "The incentive is there for producers to take more responsibility for managing their own risk" through diversification, hedging and contracting.
Sargeant was more critical of other provinces. He pointed out that Alberta producers opted to "take steps to develop the industry" and put the money left over from their closed out NISA accounts into a beef industry development fund for research and
development, while Ontario producers rolled most of their funds into new stabilization accounts.
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Ontario - weaner supplier to the world?
By ROBERT IRWIN
Ontario's weaner-feeder pig sector has always had an air of mystery about it. No one knows exactly how many sows there are. Key players won't reveal prices or the number of pigs bought and sold.Depending on whom you talk to, producers face either opportunities or gloom ahead but one thing is certain: two years of disappointing prices has thinned the ranks of traditional feeder pig producers. "They're basically going the way of the dodo bird," says London-basedDoug Maus, Canada's largest feeder pig dealer.
Still, rumours persist that up to 20,000 feeder pigs a week exit Ontario, leaving Ontario packers chronically short of finished pigs. Jim Hunter, general manager of Quality Swine Co-operative speculates the number is closer to 5,000. His membership includes some of the province's largest and most experienced producers. But their numbers have also dropped.
Agriculture Canada data shows swine from Ontario, other than breeding stock, crossing the Canada-United States border last year, averaged 4,281 per week. Quebec averaged less than two pigs per week during the same period.
Quebec is the only other significant destination for Ontario feeder pigs and is often fingered as the culprit in the exodus of pigs before slaughter. It is said former government support programs and an aggressive Quebec packing industry stimulated finishing there.
"The big flow east, in my humble opinion, might be five or six pot loads of feeder pigs a week," says Maus, who handles the majority of Quebec-bound pigs. He equates this to between 2,000 and 3,000 pigs.
Earlier this year, Quality Swine hired a consultant who devised a new pricing system to improve the climate in the feeder pig sector. Historically, two-thirds of the pigs handled by Quality Swine go from the same supplier to the same finisher.
Prices for these pigs were based on a pool price established at the regular co-op auction. Since July, their price has been based on a formula which includes feed cost, cost of production for the farrowing, central nursery, and finishing. "In the past, this thing was up and down and all over the place and either the weaner producer was losing his shirt or he was feeling good all the way to the bank; in the meantime, the finisher was on the opposite end of the stick," says Hunter. The new system, which considers market prices 15 weeks into the future, will benefit from new income protection programs like the ones offered by Ontario Pork and the Signature program from Maple Leaf because finishers can now lock in a margin, he says.
Segregated Early Weaning (SEW) seems to be the successor to Ontario's traditional feeder pig industry. Quality Swine has converted its finishing facility to a SEW nursery over the past 10 months.
Two-week-old pigs are sourced from herds which are tested and meet a specified health profile. Hunter says members must commit to precise numbers of pigs each week but it has allowed them to increase production.
"They can expand their herd, but instead of expanding their nursery, and some of these guys even have some finishing, they wean at two weeks." He says some sell their remaining pigs at 10 weeks and some also finish a portion.
Maus is one of a growing number wondering if much of Ontario's pork industry will eventually be dedicated to producing SEW pigs for giant U.S. integrators. Proponents point to cheap feed and say economy of scale is the key to North American production and slaughter.
This theory says Ontario's unquestioned sow expertise and enviable bio-security could compensate for future environmental constraints and lack of corporate and public will for a large U.S.-style pork infrastructure here. But the possibility of an open border and the entry of pseudorabies could cloud this vision.
Maus currently pays a premium of up to 10 per cent for SEW pigs meeting the requirements of integrators in Midwestern states. "When I turn around to sell it to the purchaser, I've just handed him a pig that I can probably document is worth an extra $15 at kill," he says.
In future, though, this may not be a premium market. Maus predicts it may be virtually the only market for small pigs. He has hauled two-week-old pigs straight from sowmen and pigs from SEW nurseries with equal success. Producers with a minimum of 200 animals fetch a two-per-cent premium, which jumps to four per cent for groups of 500.
Maus has carved out a growing SEW nursery pig market with several large U.S. finishers. He describes it as an opportunity for expansion-minded Ontario producers. He says he is willing to forward contract with producers dedicated to excellence. Under one scenario, four existing 250-sow herds would each double in size and at the same time partnering on a double SEW nursery, giving him the needed 500 to 1,000 single-source pigs he needs to attract U.S. buyers.
Maus says U.S. buyers want consistent, uniform supply from the same known sources each week. Producers supplying him would avoid being tied to a feed company like most SEW production loops.