The network for agriculture in Ontario, Canada
Are Bailouts the Answer?
Last Saturday, the Canadian government announced a comprehensive restructuring plan for pork producers, which includes key marketing initiatives, government-backed credit to help viable operations, and a “Hog Farm Transition Program.” The latter will allow producers to tender bids for the amount of funding they need to transition out of the hog industry and cease hog production.
The U.S. pork industry is struggling as well. On Monday, the National Pork Producers Council (NPPC) asked for help from the U.S. Department of Agriculture: “U.S. pork producers are in desperate straits right now, and they need a little help from USDA,” said NPPC President Don Butler. “The request NPPC has made not only will help pork producers and Americans who benefit from government feeding programs, but tens of thousands of mostly rural jobs supported by the U.S. pork industry.”
Governors from nine states made a similar request earlier this month, but at that time, Secretary of Agriculture Tom Vilsack answered bluntly, “We don’t have $50 million.”
However, as NPPC points out, Congress could lift a spending cap on the Section 32 program, and use $50 million of the $300 million available, to purchase pork. This program uses customs receipts to buy non-price-supported commodities for school lunch and other food programs.
NPPC also asked for assistance in opening markets that were closed (presumably due to H1N1 concerns), as well as a request for $100 million of the $1 billion appropriated for addressing the H1N1 virus for the swine industry. This would include $70 million for swine disease surveillance; $10 million for diagnostics and H1N1 vaccine development; and $20 million for industry support.
If USDA doesn’t have $50 million, will the Obama administration or Congress be able to come up with even more in the present economic situation? It’s doubtful.
Even if the money became available, will it be enough, or will the U.S. government need to offer an exit strategy like Canada’s?
"We know Canadian hog producers can become profitable again, but we have to face tough realities to make our pork industry lean and competitive," said Agriculture Minister Gerry Ritz.
It seems to me the pork industries on both sides of the border are already as “lean and mean” as they can possibly be. Producers have had depressed markets for over a year and have been making drastic adjustments to stay in business. The only things that will help are increased demand, more market access, and, most importantly, fewer sows. What do you think?
The U.S. pork industry is struggling as well. On Monday, the National Pork Producers Council (NPPC) asked for help from the U.S. Department of Agriculture: “U.S. pork producers are in desperate straits right now, and they need a little help from USDA,” said NPPC President Don Butler. “The request NPPC has made not only will help pork producers and Americans who benefit from government feeding programs, but tens of thousands of mostly rural jobs supported by the U.S. pork industry.”
Governors from nine states made a similar request earlier this month, but at that time, Secretary of Agriculture Tom Vilsack answered bluntly, “We don’t have $50 million.”
However, as NPPC points out, Congress could lift a spending cap on the Section 32 program, and use $50 million of the $300 million available, to purchase pork. This program uses customs receipts to buy non-price-supported commodities for school lunch and other food programs.
NPPC also asked for assistance in opening markets that were closed (presumably due to H1N1 concerns), as well as a request for $100 million of the $1 billion appropriated for addressing the H1N1 virus for the swine industry. This would include $70 million for swine disease surveillance; $10 million for diagnostics and H1N1 vaccine development; and $20 million for industry support.
If USDA doesn’t have $50 million, will the Obama administration or Congress be able to come up with even more in the present economic situation? It’s doubtful.
Even if the money became available, will it be enough, or will the U.S. government need to offer an exit strategy like Canada’s?
"We know Canadian hog producers can become profitable again, but we have to face tough realities to make our pork industry lean and competitive," said Agriculture Minister Gerry Ritz.
It seems to me the pork industries on both sides of the border are already as “lean and mean” as they can possibly be. Producers have had depressed markets for over a year and have been making drastic adjustments to stay in business. The only things that will help are increased demand, more market access, and, most importantly, fewer sows. What do you think?
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Replies to This Discussion
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Permalink Reply by OntAG Admin on
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Thanks to all of you who responded to our newsletter introduction last week on government action related to the pork industry crisis.
Producers on both sides of the border feel bail-outs are not the answer - they only prolong the inevitable. In fact, one Ontario producer writes,"The Canadian program does little to nothing for the average hog farmer hoping to stay in business. The loan program involves providing a "credible business plan," showing a potential to repay the loans. Has anyone at the Federal Government looked at the futures? There is no profitability, so only those with equity to draw on will qualify for loans."
All producers who responded agreed that the North American industry is already as lean and competitive as it can be. Months of prices at or below cost of production, in addition to improvements in disease control and production practices, have put the focus on efficiency.
What kind of help do we need? Several suggestions were offered. One producer believes the government purchase of pork products would be more effective (and assist in the objective of reducing the sow herd) if the money was used specifically for food products manufactured from cull sows. As with any program, however, the devil is in the details.
The need for all segments of the industry to work together to find solutions was also a common theme. Now is not the time to sit back and let someone else do the work with government - let your elected officials know how critical the situation is. If we don't tell, them, no one else will, and contacts do make a difference.
Overwhelmingly, the need for a "level playing field” for exports was emphasized. An Iowa producer writes, "The world is busy trying to duplicate our efforts, but in the meantime they use every device at their disposal to manipulate the purchase of our products. Until the playing field is leveled, these challenges will continue. I only hope they don't progress to a point in which domestic production is disabled to some degree and we become significantly dependent on imported food products of any kind. This development would be akin to our dependence on foreign energy. And dependence as such, in any degree, would be disastrous."
The bottom line is that we must still reduce the sow herd. As one producer emphasizes, "It does no good to sit back and bemoan the economic crisis we are in. Sow owners need to look inside their own operations and make the cuts that are necessary. Most operations of any size can easily cut 5 to 10 percent. If that were to be done, we would see a quick turn around in prices."
Thank you again for writing - we will follow up on the situation in coming weeks, and if you have more comments, please send them my way.
JoAnn Alumbaugh
Farms.com
Director of Communications
E-mail: joann.alumbaugh@farms.com
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