Crisis in the pork industry | “Producers will have a choice to make”

Les Éleveurs de porcs du Québec would like to set up a voluntary mechanism to withdraw from production

Go or stay? After battling numerous storms, pig farmers who want to jump ship are handed a buoy.

Meeting in an extraordinary general meeting on Monday, they voted in favor of the establishment of a buy-back program for breeders who wish to withdraw from production for at least five years. With an $80 million compensation fund, it will aim to reduce the number of feeder pigs raised in the province by 1 million.

The approximately 1,530 hog farms in Quebec raise approximately 6.8 million animals annually.

The Régie des Marchés Agricoles et Alimentaires du Québec – an administrative tribunal – will however have to give its approval for the production withdrawal mechanism to be put in place.

“Producers will have a choice to make,” explained the president of the Éleveurs de porcs du Québec, David Duval.

David Duval gave a rare interview to The Press before the extraordinary general meeting on Monday afternoon. During this emergency meeting, which lasted two and a half hours, the members of the agricultural union voted for the imposition of a special contribution to finance this mechanism for voluntary withdrawal of production.

At 92%, they voted in favour.

Special contribution

For those who choose to stay, this contribution will amount to an average of $2.85 for each animal put on the market. The Pork Farmers project that this fee will be required for approximately five years.

“The program won’t solve everything, but it will be able to lessen the shock of a reduction like there will be over the next few months,” believes Mr. Duval.

Closure of the Chinese market, COVID-19 pandemic, labor shortage, labor dispute in a slaughterhouse: for the past few years, the pork industry has been shaken by an unprecedented crisis.

Since October 2021, Quebec slaughterhouses have sent producers “purchase reduction notices” totaling more than 1.7 million hogs. The withdrawal mechanism therefore aims to align supply and demand.

“Even if it can bring a little twinge to the heart to say that a production which was a flagship three or four years ago, today, it is in the process of doing a buy-back program. But look, we have no choice. You have to roll up your sleeves. Take two steps back and then step back. »

Who will pay ?

A significant portion of the $80 million fund is likely to be paid for by taxpayers. David Duval explains that producers will be able to include the amount of the special assessment in their “marketing” costs.

The logic goes as follows. If producers receive an annual income that is greater than their production costs, they will have to bear the full cost of the special contribution.

On the other hand, if the income that producers receive is below their production costs, the Farm Income Stabilization Insurance Program (ASRA) will be triggered for that year. Managed by the Financière agricole du Québec, ASRA is two-thirds funded by Quebec taxpayers.

This means that, theoretically, taxpayers could have to extend nearly 53 million out of the 80 million kitty.

Minimum of five years

Producers who decide to leave the farm will have to do so for a minimum of five years.

“The producer will not be able to arrive after five years and say ‘I’ll be back’ if there is no demand and if the processors are still in a period where they say: ‘no, we are comfortable with what we have as production. We don’t want to increase,” explains Mr. Duval.

Producers who wish to opt out will have to submit a submission as early as April. It will be analyzed by an independent firm. The Pork Farmers will then proceed by “reverse auction” or “lowest bidder”.

“It’s not a fund to make the world rich, it’s really the minimum of the minimum,” he says. “It’s just to have some decency when leaving the production, to pay your debts. »

Take out the piglets

During their general meeting, the producers also came out in favor of setting up a second envelope of 5 million. It will be used to compensate for “empty places” in piggeries to compensate for the sale of piglets outside Quebec instead of sending them to feedlots.

“With the decreases in production that are coming, you have to be able to reduce them as quickly as possible,” explains Mr. Duval about this transition measure. “From the moment I stop the insemination, it will take me 10 months before I see the effect, before I have no more pigs leaving the farm,” he illustrates.

“No pressure”

If an insufficient number of farms raised their hands to leave, then a “restriction rule” would be put in place.

“If we were to decrease further because we did not reach our objective, all the producers will have to decrease by the percentage that we will have established. For example, if it’s 3%, well everyone will decrease by 3% [le nombre de porcs] inside his farm. »

For David Duval, the most important thing is above all not to “put pressure” on any farm. He also hopes to restore “hope” to all producers.

“I will stay in production. I will not embark on a buyback program because I believe in it, I believe in it for myself, but I also believe in it for my next successor, whether related or not. I believe in them. I tell myself all the time, I have to give them that future. »

“We manage to take a small step forward every day”

The Quebec pork industry is shaken by an unprecedented crisis. The president of the Éleveurs de porcs du Québec, David Duval, who has stayed away from the spotlight for months, granted The Press his first in-depth interview on the subject.

Since August, former Liberal minister Raymond Bachand has been leading a conciliation process between pig breeders and slaughterhouses to agree on your next price formula. How is the renegotiation of your marketing agreement going?

We are still in the conciliation process. It’s moving in the right direction, and I’m confident we’ll get there.

Are you close to reaching an agreement in principle?

For three weeks, we have been in a blitz of meetings because we see that summer is coming and that we have to come to a conclusion. I’m not here to complain, but we easily spend 10 to 12 hours a day negotiating. Every evening, we have a meeting with the conciliator to see where we have evolved in our points and redo a little brainstorming with the buyers. And that’s why I think it’s going well. We don’t sleep much these days because we try to find all the ways to get together to position ourselves. […] We manage to take a small step forward every day.

The pork industry is going through a series of storms. What are the main causes of your difficulties?

70% of our production is exported. We still had a very large exposure to international markets, and the Chinese market is an extremely unstable market that reacts without warning and in a very, very random way. From one day to the next, it can strip a factory of its certificate in order to be able to export. This is one of the premises for all of this. Then, of course, there was COVID-19, the closing of slaughterhouses and the departure of a lot of labor from those slaughterhouses. We are happy that today we have solved the problem of bringing in foreign workers because it was a difficult period for two years. It was extremely difficult for the processors. Today, we can count on these workers who have been returning for a few months. It is sure that it will bring back the profitability.

What is the responsibility of Olymel, which slaughters 80% of the pigs in Quebec, in the crisis?

As much as we could be proud when Olymel managed to do well on the international, Canadian and American scene as after that, we can arrive and say: “Ah! It doesn’t make sense, there is a quasi-monopoly. “Me, I do not embark in this kind of speech there. I rather embark on a vision of how to do better, together.

What is your relationship with Olymel?

I produce 36,000 pigs a year. About two-thirds of them go to the ASTA slaughterhouse in Saint-Alexandre and about one-third I send to an Olymel slaughterhouse.

Is it difficult to negotiate with Olymel when, basically, you are in a way its subcontractor?

No no no. Are you asking me if I have a possibility of a conflict of interest in the negotiation or if I feel, let’s face it, vulnerable? I’ve always had the chance to say that I’m quite independent in my head, and in my head, as an independent, there’s no one who makes me bow down.

Producers have been granting slaughterhouses a rebate since last summer, a rebate that has gone from $40 to $25 to $6 today. This is reimbursed to producers by the Farm Income Stabilization Insurance Program (ASRA), which is two-thirds funded by Quebec taxpayers. Is it really up to the taxpayers to pay the bill?

It’s a good question. Me, I always come back to: what does the industry bring in compared to this money that is invested? The spinoffs across the regions are $3.3 billion. A report produced by Raymond Chabot showed that for every dollar the government invests in pork production, there was $12 in direct spinoffs.

How is the morale of the producers?

Morale is difficult because we have been going through a more difficult period for years. Until now, I’ve avoided going out too much in the public square because I wanted to maximize my time compared to the [négociation de la] agreement [de mise en marché]. There, I think things are progressing very well, so we will be able to give this message of the future to the pork sector, because we believe in it, in this future.

*Mr. Duval’s comments have been condensed for clarity