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 are going to have a choice to make,” said Éleveurs de porcs du Québec president David Duval.
David Duval gave a rare interview to La Presse before Monday afternoon’s extraordinary general meeting. During this emergency meeting, which lasted two and a half hours, the members of the agricultural union spoke out in favor of the imposition of a special contribution to finance this mechanism for the voluntary withdrawal of production.
At 92%, they voted in favour.
For those who choose to stay, this contribution will average $2.85 for each beast put on the market. Swine Farmers projects that this fee will be required for approximately five years.
“The program won’t fix everything, but it will be able to soften the blow of a downturn like there’s going to be over the next few months,” Duval believes.
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, slaughterhouses in Quebec have sent producers “notices of reduced purchases” that total more than 1.7 million hogs. The withdrawal mechanism therefore aims to match 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 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. »
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 levy 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.
Producers who decide to leave the farm will have to do so for a minimum of five years.
“The producer can’t come in after five years and say ‘I’m coming back’ if there’s no demand and if the processors are still in a period where they’re saying ‘no, we’re 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 Pig 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 said. “It’s just having some decency coming out of production, paying your debts. »
At 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 production cuts coming, you have to be able to cut back as quickly as possible,” says Duval of 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 coming off the farm,” he illustrates.
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 again 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% [the number of pigs] inside their 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’m going to stay in production. I will not embark on a buyout program because I believe in it, I believe in it for myself, but I also believe in it for my next generation, whether related or not. I believe in them. I tell myself all the time, I have to give them that future. »
The Quebec pork industry is shaken by an unprecedented crisis. The president of the Éleveurs de porcs du Québec, David Duval, who has stayed out of the spotlight for months, gave La Presse his first in-depth interview on the subject.
We are still in the conciliation process. It is moving in the right direction, and I am confident that we will get there.
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 10-12 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.
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 closure of slaughterhouses and the departure of a lot of workers from these 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 profitability.
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 makes no sense, there is a quasi-monopoly. “Me, I do not embark on this kind of speech there. I rather embark on a vision of how to do better, together.
I produce 36,000 pigs a year. I have about two-thirds of them going to the ASTA slaughterhouse in Saint-Alexandre and about a third that I send to an Olymel slaughterhouse.
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 have always had the chance to say that I am quite independent in my head, and in my head, as an independent, there is no one who makes me bow down.
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 benefits.
Morale is difficult because we have been going through a more difficult period for years. Until now, I have avoided going too public because I wanted to maximize my time in relation to the [negotiation of the] agreement [of marketing]. 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.