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U.S. Export loan program

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    #11
    Franny: Looks like your hog industry is in as good shape as GM/GMC, the US banks, and Freddie and Frannie.

    Last time I checked there wasnt a Canadian Pig Board (CPB) to blame for low prices and American trade restrictions. Will your hero ag-minister Ritz come to the rescue for you? Perhaps his experience in the ostrich industry can help fix the pig industry?


    http://www.prairiepost.com/index.php?option=com_content&task=view&id=3818&Ite mid=45


    Hog industry a little sick
    Written by Publisher
    Thursday, 28 May 2009

    By Paul Beingessner

    It’s a sad time to be involved in hog industry. It might not make me very popular in some circles, but the imminent demise of the hog industry in Canada leaves me kind of cold. Oh, I’m as worried as anyone about the job losses in communities that rely on hog barns for local jobs, but the industry itself isn’t one that I brood over.
    I thought about this the other day when I was discussing farm animals with my three-year-old grandson. He had seen cows, he told me, and horses and dogs, cats, chickens and sheep. But he had never seen a pig. Pictures yes, and the little piggies on the ends of his feet, but not a real live hog. And, living in Saskatchewan, I reminded his parents, he wouldn’t be likely to see one. I couldn’t think of anyone in this area who raises hogs the way my father, and most of his neighbours did four decades ago. The closest thing to a hog around here is the odour that drifts in occasionally on the south wind from the huge complex of barns 20-odd miles south of here. And if I did want to take him there to see a pig, we would be unlikely to make it past the bio-security layer around the barns.
    As I said, there used to be a lot of hogs raised on diversified farms in the prairie region. Pigs had the title of mortgage lifters. Many farmers were in and out of pigs frequently. It was easy to ramp up numbers when prices were high, since pigs reproduce early, often and with large litters. It was just as easy to reduce numbers to a minimum when prices were low. Hence the notion of the four-year hog cycle.
    When factory hog farms came along, the dynamic changed. Instead of reducing production in times of low prices, they doggedly kept on churning out pigs. They had to do something to cover their huge fixed costs. Prices responded by sinking and remaining low. Toss in the occasional closed border due to real or imagined disease threats, and hog farms have lost vast sums of money for over a decade. Of course, the low prices that battered the huge hog barns destroyed the little ones. Hogs disappeared from the prairie landscape, to be sequestered in massive, sealed complexes.
    No doubt the state of the industry is a surprise to many in government and elsewhere who saw factory hog production as another tool in the belt of rural development. Fifteen to twenty years ago, government bureaucrats and agricultural economists were lauding the development of the massive hog operation. Saskatchewan, we were told, would soon be producing three million hogs per year. Markets were expanding worldwide. Canada, especially the prairies, had the lowest production costs in the world. We only had to build them, fill them, and prosperity would come.
    The early barns looked good. What the public seldom knew was that they were propped up by government subsidies for everything from water development to building construction. Almost all of those early barns are gone now, and gone are the community dollars that poured into the pockets of the early entrepreneurs. The government of Saskatchewan still owns huge hunks of one hog empire, and loans from many years ago remain unpaid for many barns. These loans were to be repaid when profitability returned. Profitability remains elusive.
    The truth is, we were never a particularly low cost producer. American corn always had us beat. And every hog added to our inventory had to be exported, with most of these going to the U.S., to a country already a huge exporter itself. Other countries, with cheaper and more plentiful labour, were also increasing production. It isn’t surprising then, that it took the bubble only a decade and a half to burst.
    Now, hog farmers across Canada have asked the government for a billion dollars in ad hoc payments to drag them through the worst crisis they’ve faced. What urban Canadians won’t know is just how few people actually raise hogs. They also won’t know that there is no light at the end of the hog tunnel, only a lot of desperate people hoping for a miracle.
    Driving 25 miles south of Regina last week, I got a huge surprise. Rooting around by some wooden granaries near the road was a herd of footloose pigs, older sows by the look of them. I have no idea where they came from, or where they went. But as I went by, I gave them the thumbs up. At least for a short while, they were the only lucky ones in a sad industry.

    Comment


      #12
      After reading the article and trying to figure the link between a hog industry that is struggling and the US export program. Perhaps GrainBeetle is arguing that Canada is better off exporting grain than adding value domestically. Perhaps the suggestion is that grain farmers should still wd9 tractors (sorry for abusing your name wd9) and 12 foot drills. Perhaps we would be better off with 60 sow herds everywhere and people returning from Mexico with H1N1 virus/no bio security on any of these farms.

      Even more questionable is why the crop sector celebrates failure - particularly for a major customer for their grain. Most industries celebrate success and achievement.

      Comment


        #13
        Dont throw stones in glass houses Agstar...

        Export Development Canada

        Mr. Siegel pointed to recent initiatives launched under EDC’s new domestic powers which will facilitate additional domestic credit, surety and contract guarantees totaling $3 billion. This will allow private financial institutions to do more for their customers and take on new business.

        Mr. Siegel said that, thanks to years of preparation in better economic times, EDC has been able to step into an expanded role to help Canadian companies through tough times, now that traditional credit has become a scarce commodity. By the end of April, he noted, EDC had facilitated $22.5 billion in trade and investment by Canadian companies, including 925 new customers. The amount of business is greater than at the same time last year, the year when EDC undertook the most business in its corporate history.

        Comment


          #14
          Just to bridge the gap, maybe you will remember when the Crow was killed the Hog industry would flourish because of cheap grain. It was one of the main reasons for the elimination of the crow. Well the feathers are starting to settle and it appears the hog industry success has more to do with the U.S. programs than ours.

          Comment


            #15
            Lots of years between the changes you mention and years of both profitable grain and hog operations with years of struggle in between. Hogs industry better times will come as will troubled times for the grain industry.

            The hog industry has gone through the structural change and this is likely an indicator of what the grain industry will look like in 10 to 20 years. Have seen another survey recently that highed the average age of farmers remains about 56 to 58. As the upper age end of these farmers retire, they are not going to be replaced by 1,000 acre farms. Bigger farms will change the risk profile of the industry and highlight the need to change how the industry is operated.

            To the original posting, it would appear both Canada and the US have programs to keep exports moving in difficult - a good thing I would think.

            Comment


              #16
              This Crow:

              The one that Lang tried to kill for a 5-6 billion payout as an annuity on land

              The one that Pepin tried to kill for a straight payment for 11 -13 billion

              The one that Mayer tried to kill for 6-7 billion...

              all met with left wing extremism that it can’t be taken away from us ... (or from the Pools perspective - we are not ready yet)

              Well Goodale did for 1.3 billion

              Who killed the CROW Agstar?

              Who lied to whom?

              The only thing guaranteed in perpetuity the Indian Treaty.

              You were fed the perpetuity line for so long you believed it …… the same thing is happening again with CWB premiums...

              Who is brave enough to admit they rallied against a CROW payment?

              Anyone?

              In the past ten years, I've made a detour through Maymont twice, just on the offhand chance E.K. Turner is walking down main street - so I can run the son-of-a-bitch over...

              Comment


                #17
                Temper, temper I suggest using the cheap feed idea was never a good argument for eliminating the crow. It's end was more about the way it was ended with the Railways not being forced to return all the land and mineral rights they got for subsidizing grain movement. What it has done eventually is shift feed production to the U.S. corn belt. We have moved away from feed grains , never to return. I did not argue for a one time payout but rather an investment in Ag research and crop devlopment that would have made us # 1 in Agriculture. Instead a one time lump payout was literally pissed away and the railways allowed to rationalize to two mainlines. Maybe there should have been a closer look at the transportation infrastructure as well.

                Comment


                  #18
                  At least you gave it some thought...

                  at 11-13 bill in 1989 dollars - no one could touch us...

                  Otto's idea had merit ...I talked to him 2 years ago about it and he thought with inflation - the annuity would have been the best option and to the question:

                  What was the one thing you wish you could change in your career?

                  Changed the CROW when I should have...

                  Comment


                    #19
                    Agstar77

                    I will challenge you on your numbers on the livestock numbers. Livestock numbers are up over the period.

                    Hogs.

                    http://www.statcan.gc.ca/daily-quotidien/090217/cg090217b-eng.htm

                    Cattle.

                    http://www.statcan.gc.ca/pub/23-012-x/2007002/5002665-eng.htm

                    Western Canada has had declining feed grain production - still a less profitable crop relative to other alternatives. Growing livestock feed demand up to but not including the last two years (realizing all the issues both the hog and cattle industry have had to deal with over the past 7 years) and lower feed grain production.

                    In the good old crow days , western Canada used to export 2 to 4 million tonnes of feed barley. What has occurred over the past 13 years is that we are value adding at home. But perhaps you are suggesting this is wrong and we should be still exporting feed barley or more likely yet, cutting back barley acreage by 3 to 4 mln acres (camels in Saudi Arabia likely can eat Ukraine/Russian barley cheaper than we can supply).

                    Comment


                      #20
                      Actually re-read your comments and likely off base on the above with the highlight the domestic feed market has outpaid the export market for the whole time period - feeding your own livestock/selling to a neighbor/domestic customer will put more money in your pocket 90 % of the time. On the comments, I don't think crow loss had anything to do with shifting of feed grain production to the US. Farm support programs, adoption of technology (including GMO) and growth in meat demand have been the drivers.

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