Hog farmers plead for emergency loan aid

Wed Dec 12, 2007 12:37pm EST
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By Roberta Rampton

WINNIPEG, Manitoba (Reuters) - Cash-strapped Canadian hog farmers asked federal and provincial governments on Wednesday for emergency aid to help them weather soaring feed costs and prices hurt by the strong Canadian dollar.

Producers need to be able to borrow money from banks and other lenders to bridge the gap between hog prices that have recently plunged to 85 Canadian cents (84 cents) a kilogram from the long-term average of C$1.35-C$1.50 per kg.

Many farmers have used up their collateral, and need governments to step in to provide emergency loan guarantees, said Clare Schlegel, an Ontario hog farmer.

"That would allow them to pay their feed bills and pay their vet bills," said Schlegel, president of the Canadian Pork Council. "It's not a major ask at all."

Canada's vast expanses of land and large supplies of cheap feed grain led producers to boost hog production by almost 30 percent from 1995 to 2005, making it the world's third-largest pork exporter after the United States and European Union.

But the economics have since turned against them. Record high grain prices, caused in part by surging demand for corn in U.S. ethanol plants, have increased Canadian feed costs by 60 percent in recent times, Schlegel said.

Meanwhile, the soaring Canadian currency has also squeezed the country's pork and hog exports, making the shipments more costly as they try to compete with comparatively cheaper U.S. product.

The Canadian dollar's rapid climb in recent months topped out at US$1.10 in early November. It has since retreated, but remains close to parity with the U.S. dollar and was at 99 U.S. cents on Wednesday.   Continued...