Canada hog farmers mull on exit cash

 

 

The Canadian hog sector is weighing the pros and cons of asking the federal government for more funds to help loss-making farmers cease production.

 

Only one out of three farmer applications to the current C$75 million (US$70 million) government buyout pool has been successful.

 

Hog farmers have suffered from years of low prices, the reduction of live hog exports to the US because of the US country-of-origin labelling law, and a strong Canadian dollar.

 

The biggest risk of increasing incentives for farmers to cease production for three years is that supplies may shrink so much that packers have to cut production, said Jurgen Preugschas, president of the Canadian Pork Council.

 

He said there are concerns that more of the industry's infrastructure would collapse, and that the Canadian industry as a whole could not handle losing a lot more sows.

 

Canada's hog herd has shrunk to its lowest level in 12 years, falling 4.5% year over year to 11.63 million head on January 1. The exit programme has so far committed US$61 million to 335 farms that will remove 104,531 sows and 660,541 total pigs from production.

 

The final C$14 million (US$13.3 million) will be distributed March 10.

 

If applications are high again, the industry should ask Ottawa for more money, said Karl Kynoch, a hog farmer and president of the Manitoba Pork Council. He said the farmers should be provided with sufficient help if they are forced to exit.

 

The Canadian government said it would extend the deadline for applications to a separate hog loans programme to March 26 from March 1. It also said it would increase its share of risk on certain types of loans.

 

Preugschas said he hopes the changes will encourage lenders to approve more loans for farmers staying in production.