Pork Producers to Study Forward Pricing Programs as a Business Risk Management Tool

CANADA - The Canadian Pork Council (CPC) has welcomed funding for the “Pork Industry Hedging Program Analysis“ project under the AgriRisk Initiatives – R&D stream.
calendar icon 13 July 2015
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"Hog producers face a combination of production, market and financial risks that can undermine the success of a farm without a range of risk management tools and strategies. This project will explore the feasibility of a program that can mitigate the risk of margin calls so that hedging becomes a useful and used business risk management tool," stated CPC Vice-Chair Bill Wymenga.

While currently producers have access to hedging on the futures market, there are barriers to them doing so. This project will gather statistics regarding current forward pricing program opportunities in various markets in Canada and the anticipated demand for a program.

CPC in partnership with its provincial members, hope to gain a greater insight into why Canadian farmers utilize hedging and other risk management strategies to a lesser extent than their US
counterparts. The project’s objective is develop a structure for a program to mitigate the risk of margin calls that would complement existing risk management tools.

“I am pleased to see this project moving forward given the cyclical nature of hog markets,” added CPC’s Chair Rick Bergmann.

“Developing and having producers’ employ effective risk management has long been a topic of interest and priority for governments and the hog industry.”

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