A new, $200-million pork processing plant recently announced for Winnipeg will add to the burgeoning success story in Manitoba’s hog industry. For the expansion to continue and the plant to succeed, however, Ottawa needs to address the challenges of costs along the supply chain.
While Manitoba and Saskatchewan are competitive in the production of weanlings, when it comes to finishing hogs the U.S. is still way ahead, by up to $20 an animal. The main cause of the difference is the high price of feed here, a direct consequence of poor federal policy.
A processing plant’s viability depends on access to affordable hogs. A hog farm’s viability requires access to a cheap source of feed, and a grain farm’s fiscal solvency can hinge on its ability to grow a high volume of feed grain for a low cost. When all this happens within a country, you have a fully integrated, self-sufficient industry that is able to capture every last value-added nickel on the table. You have a true generator of wealth that would be the envy of the world. We have the potential to achieve that on the prairies if we nudge a few policies in the right direction.
The Americans do it by massively subsidizing the production of corn, the source of a large part of their advantage, and part of ours as well. We buy this cheap grain to feed our animals, but it does cost something to truck it up here. Nevertheless, most of the time it is still the least expensive way to feed our livestock, which has Ontario corn growers understandably upset and why they are pushing for a countervailing duty on U.S. corn.
Some want Canada to subsidize the production of feed grains as well, but they are mistaken. That would burden our beleaguered taxpayers even further. It would also open us up to retaliatory trade action from the U.S. of the kind that our pork producers successfully fought earlier this year. The difference is that this time they would lose. And we don’t need subsidies to change the equation. We have the ability to do it in a better way.
We are perfectly capable of producing feed wheat, in a volume and for a price capable of sustaining a vibrant hog and grain economy. But both the Canadian Wheat Board (CWB) and the Canadian Grain Commission (CGC) have stifled the possibility. Thanks to these two organizations, growing feed wheat on the Prairies is not an act of man but an act of God. Only when poor weather downgrades milling wheat to feed do we have an abundant supply available.
For its entire 70-year lifespan, the CWB has focused on high-protein milling wheats, which are the highest quality in the world. Unfortunately the genetic makeup of wheat allows us to breed varieties either for high protein or high yield, but not both. One of the CGC’s standards for registering new varieties of wheat is that they must meet or exceed the same protein level as an existing one using the same amount of fertilizer, an impossible task for high-yielding feed wheat. In the last four years, over 50 new varieties of such wheat have been rejected because of this and other nonsense—such as “looking” (if you can believe it) too much like milling wheat.
The solution? Simply remove wheat with protein levels of 12% or less from the control of the CWB, which has never been keen on buying and selling it anyway. On top of strengthening the intellectual property rights of plant breeders so they can see a fair return for their investment, that would ensure a boom in the amount of high-yielding feed wheat grown in the west, all at minimal, possibly zero, cost to anyone. The benefit from an abundant supply of affordable wheat would go beyond hogs to stimulate the entire livestock complex and the ever-expanding ethanol industry as well.
The ability to take a few seeds, some fertilizer, a lot of ingenuity as well as hard work and transform them into neatly packed boxes of bacon, ham and pork chops to sell all over the world is an awesome thing. It’s exactly what a state-of-the-art, modern, value-added economy should do.
If we truly want it to flourish, we can create an environment that encourages it, from the bottom of the chain right to the top, with a stroke of the Ag Minister’s pen.
This article originally appeared in the Winnipeg Free Press December 13, 2005.