Western Canada’s broken pricing model has spurred a group of independent producers to purchase or build their own packing plant.  
The group has received unanimous support from the board at Western Hog Exchange after airing their desires during the Annual General Meeting on October 23 in Red Deer, Alta. WHE General Manager Brent Bushell says that, while Quebec’s single-desk marketing system assures producers will receive $1.90 per kg, producers in Western Canada currently receive an average of $1.45 per head. That amounts to an average loss of $20 a head, Bushell said in an interview with Prairie Hog Country on Nov. 19.  
Western packers focused on short-term gains risk losing their supply of hogs within the next two years if independent producers working on a commercial scale can’t see significantly more return for their hogs, he said, outlining six options that the industry may consider:  
1) Challenge Alberta Pork to lobby for a single-desk marketing system modelled after Quebec, allowing western producers to realize an average profit of $30 per head.  
2) Producers buy or build their own plant, preferably under federal license to serve export markets. They could structure their own pricing system so that profits at one side of the business would support losses on the other side.  
3) Producers convert their barns to isowean production and ship live to finishers in the United States.  
4) Producers cut back production with the goal of bringing packers to the table to negotiate better pricing.  
5) A total shut down on independent farms.  
6) Leave things as they are; independent producers continue to lose money until they can no longer operate.  
WHE will help fund the development of a business plan as the producer group moves forward with its proposal to either purchase an existing plant or build a new one, said Bushell.  
Alternatively, it would support creation of a single-desk marketing system built on the Quebec model, he said.  
“I’m extremely happy and I’m excited that producers are prepared to do something different,” said Bushell.  
“We’re at that crossroads where the next two years is really going to tell us what the hog industry in Western Canada looks like. If the game stays the same as now, it’s probably going to be a game without any independent producers.”  
Bushell repeated the words that have become a mantra among western producers: “There’s money in pork – we all know that. But there has to be a fair sharing of that.”  

He said learning how prices are set in Quebec has been an eye-opener in the west.  
“The bottom line is, if I succeed in getting more money for producers, the industry has a chance to survive and to revitalize,” said Bushell.  
In the current scenario, Olymel’s Red Deer-based plant is the biggest buyer and gets a portion of its supply from farms it now operates in Alberta and Saskatchewan.  
One of the big problems with the processor-owned farms is that the costs of production on a company farm are higher than on an independent farm, especially on Hutterite colonies that represent about half of the independent farms in the west, said Bushell. He estimated Olymel’s cost of production at $2.10 per kg.  
Additionally, western farms operate at a lower cost of production than their counterparts in Quebec and Ontario, he said.  
The biggest risk to independent producers under the existing pricing model is that their barns and equipment are aging and in need of repair or replacement. None of that work can be done by producers who are losing $20 per animal, said Bushell.  
A fair price with some long-term guarantees would enable independent producers to improve their barns and, in time, consider expanding their herds, he said.  
There is no question that the demand for pork would support an expanded herd in Western Canada, where there are adequate resources for more hogs as well as good access to Pacific Rim markets, he said.  
“All the Western Hog Exchange and producers want is a fair share. If we can ever get to that point . . . none of those packing plants are going broke, including Olymel.”  
A fair price that gives producers a share of the profits realized at the plants would put the industry back on track for everyone, including the suppliers and workers who are supported by farmers and packers, said Bushell.  
If that happens: “I would say we’re going to spend the next two years stabilizing the industry, paying off bank loans, keeping the historic knowledge base of independent producers and, in Year 4, we can sit down and talk about expansion,” he said.  
WHE has the necessary resources and will give its full support to those producers who are interested in purchasing or building a plant of their own, he said.  •
— By Brenda Kossowan