The idea to merge hog marketing services on the prairies began over ten years ago. From that getting together emerged the joint organization Hogs @ Manitoba and Saskatchewan, or when launched in January 2010, renamed to Hog Administrative Marketing Services or h@ms. Today, h@ms uses that power of volume to work for our producers.
“Our producer base continues to grow, particularly further west. Our delegates passed a resolution at the annual meeting in April to create an Alberta district. Given the positive momentum and more producers using the co-op services,” said William ‘Bill’ Alford h@m’s general manager. “We’re going to get that process underway heading into the spring – yes, better serving the hog producers from here (Manitoba) right to BC.”
Alford said the attraction for producers to deal with h@ms Marketing co-op is the fact it is producer based.
“You have to be a producer that markets hogs through the co-op to be a member. We provide primarily risk management services so that producers could book their hogs for a contract up to 9, 10 months out,” he said. “That’s a big driver of new business, especially with the volatility in the markets. It’s the new normal. It’s an excellent tool that producers like to use to help keep cash flow through all periods positive and take advantage of profitable prices.”
The impression often exists that the hog industry in Western Canada has few if any independent producers and that is where h@ms is at independent producers that market to the co-op, but mostly Hutterite colonies.
“With a consolidation over the last ten years, a lot of the other independents, non-colonies, have exited or gone on some production-type contract with one of the packers,” said Alford. “That is still happening, particularly out west, but we still give a single voice and strength of numbers having the co-op structure. We offer risk management programs to all the processors, so we have the expertise to do that. The producers have strongly made it clear that that’s a service they want and need to manage their business. It’s helped producers take advantage of opportunities. We’re seeing modest expansion, even in Manitoba here with some of the producers, with the optimism in what they could see profit margin wise heading into next year.”
Without a doubt, the optimism in the pork industry comes from the fate of other producers in other countries, most specifically African Swine Fever affecting most of Asia.
“There’s a dramatic drop in pork production worldwide over that. It’s kind of hard to fathom. When you put into perspective, up to half of the world’s pork production is devastated by the disease,” said Alford. “As an exporting country like Canada, the US, that’s an opportunity that has lifted the hog futures and pork prices. It’s volatile, though, a wild ride. When this news first came out, we ran up to over a dollar a pound, US. Back in April, pretty much across all months, producers took action, and we’ve never seen this many hogs booked on a forward contract before. It’s unprecedented, which is good. Prices have softened with the US-China trade war, and complicating trade on many ag products. And even our government here with the Chinese situation, not shipping any red meat over there. But it still doesn’t fundamentally change the fact that this pork has disappeared. It’d be a big hole to fill.”
Lingering effects of COOL
Alford said the once-lucrative market to US packers has all but dried up for hog producers in Western Canada when the Americans implemented country of origin labelling or MCOOL.
Many of the US packers stopped buying Canadian origin hogs, like born and raised in Canada. There are a few smaller plants further west that source some pigs out of Canada, but the tier one packers don’t have any presence here.
“The shackle space in Western Canada is under-utilized right now, so the prices we receive here are more competitive to keep the hogs here,” he said. “The way the North American pork markets, and we are on the export market for close to 70 per cent of what we produce. We need to rely on global pork prices, ultimately to figure out what it’s worth.”
h@ms contracts with the four major hog plants in Western Canada, namely Maple Leaf in Brandon, MB, Donald’s Fine Foods, in Langley, BC, the Thunder Creek plant at Moose Jaw and HyLife in Manitoba. •
— By Harry Siemens