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Pork Commentary: Trip to Washington D.C.

by 5m Editor
17 March 2009, at 7:57am

CANADA - This week's North American Pork Commentary from Jim Long.

Last week we went to Washington, D.C. Some points:

  • USA Department of Agriculture has more employees than any other government department. By the looks of the number of their people in their main buildings most of them seem to work in Washington.

  • We wonder if the number of Ag department employees will soon outnumber farmers as agriculture consolidates. Looking around the Department of Agriculture in Washington we sure wonder if many have ever worked on a farm, milked a cow, bred a sow, or drove a tractor that did more than cut grass. There is a huge distance from the government triangle in downtown Washington, D.C. to the fields and barns that feed Americans. As time goes on, the world between policy makers and implementers of government ag policy are getting further and further removed from the farm. It's maybe why the idea of burning our food to make ethanol continues to be part of policy that seems to be supported by the USDA and the new secretary of agriculture.

  • As Secretary Vilsack said last week "Our focus here has been on renewable energy encouraging the Environmental Protection Agency to consider an adjustment to rules on the amount of ethanol that can blend with gasoline so that more ethanol is required, therefore more ethanol will be sold."

    "This is an ethanol industry that this administration is committed to… We can use our loan guarantee capacity to make lenders a bit more comfortable with giving ethanol facilities time to get out of this tough spot."

  • These words are not what livestock producers want to hear. It is disappointing. Continued and more legislative support with financial subsidies for our competition for grain, this policy is the greatest threat to the global competitiveness of American poultry and livestock production.

  • On Saturday the Department of Agriculture, like most other government buildings was like a ghost town. The only government building that appeared to have weekend activity was Printing and Engraving where low and behold USA money is printed. If there was ever a need for 24/7 activity it is the printing of US dollars! These days it sure beats borrowing from the Chinese. Maybe if they print enough our prediction of 90 cent lean hogs will be more than a dream.

  • President Obama's announcement of stem cell research support will, from what we can determine give support to science based food production. Attitude and money will be allocated for genetic work which will accelerate not only plant but livestock evolution. 'Genetic Modified' will have a greener light. European genetic companies and food production will fall farther behind in productivity and cost of production when they fail to adapt. It's a major reason in our opinion several European Genetic companies have moved primary research to North America. They want to be part of North America's advancement and solution environment for increasing the genetic capacity of our food production, otherwise they fall behind.

  • Washington, D.C. does not appear to be suffering a recession - few for sale signs, no foreclosure signs. New buildings are going up, restaurants are full - all is good. Maybe stimulus packages look after some more than others. One other thing, I'm not sure we have a career as a lobbyist.

Big Sky Farm

Last week we wrote about Big Sky Farms, the largest government owned hog production facility in the world. Owned, approximately 70 per cent by the Saskatchewan Government, it has been a huge sinkhole losing millions and millions of dollars over the years. Last week we received a letter not from Big Sky CEO John Leclare, or its chairman Larry Martin, or even the Honourable Bob Bjornerud, Saskatchewan Minister of Agriculture. We received it from Joe Kleinsausser, chairman of Saskatchewan Pork (We are not sure what they do), complaining about serious inaccuracies in our report. We are not sure what we had inaccurate. We reported and stand by:

  • Sky is owned approximately 70 per cent by the government.

  • The government announced a subsidy of $20.00 per market hog.

  • The last pork powerhouse list had Big Sky at 50,000 sows, about half of all of Saskatchewan's production.

  • The Saskatchewan government has announced they will sell Big Sky. They have not, instead they announced a subsidy.

In Mr. Kleinsausser's letter he says 'While we respect your right to your opinion, if Big Sky Farm is in business or is shut down, little will change in the North American hog market.'

Well Mr. Kleinsausser, we respect your right to an opinion also. But we categorically disagree. Big Sky is a sore in the midst of the Canadian Swine Industry. It needs to go away. A free enterprise independent society does not need government owned hog farms distorting supply and price. Big Sky has been and always will be a failure. The current government of Saskatchewan was elected as a free enterprise party after years of socialist government. The socialist government invested in Big Sky. The current government did not. It must fundamentally agree with our premise that the government has no business owning hog farms. Remember, they did not write a protest letter to us. They probably get a continual spin from the Big Sky crew as to how it will work out. In the meantime the sinkhole could be $3 to $4 million a month. The hole gets bigger. It will never get smaller. No government employees group can ever run a pig farm. They never have, and never will. Close it down. Governments should never be in the hog business. Independent producers can produce all that is needed.

Markets

Iowa - Minnesota Lean Hog Prices closed Friday at 56.90 - down 5.00 from a week before. USDA hog marketings for the week were 2.156 million, down 5 per cent from last year' s 2.276 million or 120,000 head less. We did not expect the big drop in numbers much before mid April according to the 1 December USDA hogs and pigs report but this is what we need, falling slaughter numbers. We expect by May weekly marketings will be around 1.9 million a week. Last year in March the lean hog price averaged 54 cents and in May it averaged 79 cents. This can't come soon enough.