Canadian Gov Hog Restructuring Plan Announced.

[joedales]

GOVERNMENT OF CANADA DELIVERS SUPPORT FOR HOG INDUSTRY RESTRUCTURING

AAFC News Release

WINNIPEG, Manitoba, August 15, 2009 – The Government of Canada is delivering a comprehensive restructuring plan for pork producers by investing in key marketing initiatives to get more customers buying Canadian pork, providing government-backed credit to help viable operations weather the current economic uncertainty and helping struggling operations to transition out of the industry.



"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. "Some operations simply aren't viable any more and we are going to help them transition out of the industry and reduce production. Some operations need access to credit to weather the current economic storm and we are providing government-backed loans to help them restructure. Farmers want to make their living in the marketplace and we're investing in marketing to find new customers for Canadian pork and make our pork industry successful for the long term."



The new initiatives being announced today include:

An International Pork Marketing Fund of $17 million for market research, promotion and access initiatives to find new customers for Canadian pork products.
Long-term loans with government-backed credit that financial institutions can offer to allow viable hog operations to restructure their businesses. These long-term loans will be provided at market rates. Producers with sound business plans will be able to access short-term credit for operating costs such as feed and payroll.
A Hog Farm Transition Program to allow producers to tender bids for the amount of funding they need to transition out of the hog industry and cease hog production for at least three years. This program will invest up to $75 million to gradually reduce production and oversupply issues.


Agriculture and Agri-Food Canada officials are working closely with the pork industry and financial institutions to finalize program details. These new initiatives respect Canada's commitments made under international trade agreements and ensure Canadian pork producers will continue to have access to market opportunities around the world.



"We're standing with Canadian pork producers as they restructure and streamline the industry to adjust to new market realities," said National Revenue Minister Jean-Pierre Blackburn, who also serves as Minister of State for Agriculture. "These investments will rebuild the Canadian pork industry for the long term and we will continue to work with pork producers as they restructure their operations."



Detailed program information will become available over the next few weeks. For more information, visit www.agr.gc.ca.

[fjlip]

Ottawa's buyout offer didn't give Levi Waldner much hope. The 65-year-old hog farmer from Baldur, Man., said he sometimes feels he might almost be better off burning his barn to the ground.

He said $75 million won't go far given the scope of the crisis and neither will more long-term loans.

"We're borrowed up to here," said Waldner, who has 1,000 sows. "We'd like to stay in it ... but what can you do?"

[stubblejumper]

most colonies have more than just hogs to rely on

[agstar77]

Interesting how the governments of the three prairie provinces have encouraged hog production and large kill plants, but now that times are tough they won't step up in a meaningful way.

[fjlip]

That is my thought too. The loans are a load of hog manure. There was such a push for these monster barns about 5 years ago! Now worth 10 cents on a dollar. Talk about wrecking the price with over production all over north America. This is a classic example of what NOT to do for economics classes. The free market at work, investor beware.

[SASKFARMER3]

This is the saddest of all the Ag Canada and Govt BS. Got huge amounts of people to get into this business, now that the shit hits the fan they walk on these guys and give them loans. Yet GMC and Chrysler are worth saving. Farmers were third class citizen in our own country. We saw it in 2002 and 2004 with the frost the Cattle guys with BSE. and now the hogs its really really sad.

[liberty]

Many hog barns today are owned not by farmers, but by non-farm investors. Spare me the sob stories of the death of mom-and-pop hog barns. Those barns ceased to exist long ago.

Face it: many investors in hog barns made bad choices and should have to live with the consequences. Taxpayers are not obligated to bail these people out. As for the bailouts of Chrysler and GM, these were a monumental mistake too, an "investment" for which taxpayers are going to lose big time.

If the federal government insists on giving even more loans to businesses that cannot even pay off the ones they already have, then taxpayers can pretty much kiss this money goodbye.

[liberty]

Re the story on Levi Waldner. Just who is this guy? The story makes it sound as if he's farming on his own, but I doubt that he's the sole owner of a 1000 sow hog barn. It's more likely that he's the hog boss for a Hutterite Colony.

By wording the story in this way, is the reporter trying to hide the fact that Colony hog operations are usually part of highly diversified, multi-million dollar farming operations that often have significant manufacturing concerns as well? I live close to a number of colonies and I can tell you that they are not exactly populated by downtrodden peasants.

The reporter seems bent on trying to elicit sympathy by portraying Mr. Waldner as part of another mom-and-pop hog operation, when it seems very unlikely that he is.

[Fransisco]

I can't see this amount of money actually accomplishing much. It sounds like the loans will only go to people who would qualify for them anyways. The 75 million for keeping barns empty for three years will hardly make a dent in overall supply and will likely be spread so thin as to have no effect at all.

Things will continue along as they have until the market corrects itself.

[charliep]

I watch the impact of the hurt in the livestock industry and subsequent reduction in numbers on feed demand. This will impact the grain side.

Will have to seek Fransisco assistance but every sow that is pulled from the breeding hurt likely reduces domestic feed demand by about 7 tonnes. Should go to the experts but assumed 110 kg of gain on a hog and 3 kg feed/kg gain. Not sure on average pigs/sow but assuming 21 and 1/3 tonne of feed each, I come up with the 7 tonnes (hopefully close).

[charliep]

For what it is worth, here is a USDA press release on USDA activities to aid farmers south of us.

http://www.usda.gov/wps/portal/!ut/p/_s.7_0_A/7_0_1RD?printable=true&contentidonly=true&contenti d=2009/08/0373.xml

[Fransisco]

I think your 7 tonne per sow figure should be pretty close. One of the numbers being thrown around is $500 per sow for closing the doors for three years. That works out to 150,000 sows and about a million tonnes of feed that wouldn't be needed.

Don't know if $500 a sow is reasonable, that's not the end of the business that I'm in but like I said that's one of the figures being bounced around.

[craig]

I agree with Charlie's assessment. If you as grain farmers don't think this will effect your bottomline you are sadly mistaken. I expect a large cow herd reduction also this fall and that will also impact us. As for who owns these operations I know alot that are still owned by farmers or groups of farmers. Withot a restructuring ( writedown)of loans by the banks in the near term you will see a number of these large operations fold. It is not possible to sustain the current losses at this stage of the game. Sadly if we loose the feed industry we become more dependent on the CWB and if you think that is a winning recipe just look what's on the table right now with predictions it's only going to get worse.Guess we can grow wall to wall canola till our fields become over run with disease. As a farmer I'm always looking for more options not less.