Livestock investment will be a boondoggle
The StarPhoenix (Saskatoon)
Thu 01 Feb 2007
Page: A9
Section: Forum
Byline: Cathy Holtslander
Source: Special to The StarPhoenix
Following is the viewpoint of the writer, a Saskatoon resident and a member of the Beyond Factory Farming Coalition, a national advocacy group.
At the recent Banff Pork Symposium, Regional Economic and Co-operative Development Minister Clay Serby indicated the Saskatchewan government would be supporting a hog slaughtering plant for Saskatoon.
This comes after Maple Leaf Foods announced its plans to shut down the Mitchell's plant in Saskatoon within three years and Olymel withdrew from the Olywest consortium (Olymel, Hytek and Big Sky Farms), which was hoping to build a slaughterhouse in Winnipeg.
Maple Leaf and Olymel are the biggest players in the pork processing business in Canada, controlling approximately 65 per cent of the market. Both companies have been bleeding red ink profusely and are shutting down facilities in Ontario, Quebec, Manitoba and Alberta. Maple Leaf's business strategy includes drastically cutting its money losing live hog business to shrink production and focus on a smaller volume of higher value products.
Why would the provincial government be interested in putting money into a business that existing industry leaders -- large, fully capitalized, experienced national corporations -- are getting out of?
Meanwhile, Red Williams, in Sask. needs to capitalize on livestock boon (SP, Jan. 25) is recommending that Saskatchewan increase its involvement in livestock production and processing. I don't understand the kind of vision that sees opportunity in an industry characterized by bankruptcies, closures, labour-shortages, an immigrant recruitment scandal, disease outbreaks and moratoriums due to air and water pollution.
Large-scale intensive livestock production must compete as a commodity on the world market by selling large quantities at low cost. There is relentless pressure to reduce costs by cutting wages, avoiding environmental regulation, using the cheapest possible feed, crowding animals into the smallest space and getting government subsidies.
Saskatchewan is never going to have cheaper feed than Iowa, with its U.S. Farm Bill corn subsidies. Nor is it going to have cheaper labour than Poland's or lower heating costs than Brazil's.
It appears that Saskatchewan's competitive edge is to have its taxpayers supply our biggest hog producer with free, or nearly free, operating capital.
Big Sky Farms now dominates production in Saskatchewan with 41,000 sows. According to the Crown Investments Corp., the government owns 68 per cent of Big Sky's equity under Investment Saskatchewan. The government's preferred shares were converted to common shares in 2006. That means that no interest will be earned on the investment (though that may be a moot point, as profit is required for interest to be paid).
The Saskatchewan Government Growth Fund III owns an additional 13 per cent of Big Sky. The company has also obtained discount capital at taxpayers' expense through the Golden Opportunities labour-sponsored venture capital fund ($5 million was invested in July 2006 -- $1.75 million of that amount being supplied by taxpayers in the form of tax credits to investors).
The federal government pitched in, too, with a loan from Farm Credit Canada. When Community Pork Ventures (Quadra) went bankrupt, Big Sky bought up the assets at cents on the dollar (while the original community people who invested in the barns got nothing), giving the company yet another cheap capital competitive advantage.
If the government proceeds with putting public money into an industrial hog slaughtering plant in Saskatoon to service Big Sky, it will certainly have spent a lot of money to keep a lot of people busy and there's no doubt on-going subsidies will be required.
Meanwhile, capital that could have been used to develop a more socially responsible, non-polluting approach to livestock production, or even other industries such as wind and solar energy technology, both employing workers in safer, more enjoyable jobs, will not be available.
It's not too late to change course.
Sask. needs to capitalize on projected livestock boon
The StarPhoenix (Saskatoon)
Thursday, January 25, 2007
Page: A9
Section: Forum
Byline: C.M. (Red) Williams
Source: Special to The StarPhoenix
Following is the opinion of the writer, president of Saskatchewan Agrivision Corporation.
The next 10 to 15 years have been coined as the era of the "Livestock Revolution" by researchers at the World Bank.
This view of the future is based on the growing demand for milk and meat, mainly by the rapidly emerging middle class consumers in the developing nations.
Some estimates put the global increase by 2020 at nearly double the current level right across the board for milk, beef, pork and poultry.
The implications are critical to the future of the prairie region. We have experiences from around the world to indicate how future production patterns likely will emerge. In the 1970s, the American expansion of large hog units began in the midwest and started to push out of the Corn Belt into the southern states, with some accompanying environmental problems.
The 1980s saw the concentration of large pork production units in northwestern Europe (Denmark, Belgium and the Netherlands particularly), to be close to ocean ports required for the import of feed stuff.
Recently, the Netherlands government has acted to reduce the swine population drastically because of the inability of the land base to absorb the amount of manure produced.
Across Asia, a shift is taking place from thousands of backyard livestock producers to locating large dairy, poultry and pork units close to population centers, to shorten the distance to market.
However, this is now restricting the timely access to feed grain.
Note that in all these instances, the concentration of livestock near urban centres has exceeded the capacity of the surrounding fields to receive manure and, of course, has led to odour problems.
Quebec and Manitoba have recently halted the expansion of livestock numbers while they assess the way to locate production units to maximize production efficiencies through access to livestock, labour and feed, as well as to manage the application of manure as a natural fertilizer and control the potential for environmental problems.
Although livestock production often has been done close to the consumer, some factors may dictate another strategy. It is cheaper to ship finished meat and dairy products than to move an equivalent amount of grain and feed required to raise livestock.
Cattle are best raised where there are large areas of grazing lands.
Large intensive livestock units such as dairy, pigs, poultry and cattle feedlots need a large land base to receive manure and as a source to provide feed. Such livestock operations are best positioned at a distance from areas of built-up human habitation.
It doesn't take a genius to see the opportunity for increased livestock production across Saskatchewan, despite its relatively isolated transportation system.
We need a long-term plan for the livestock industry that can match our tremendous production capacities with the predicted growth in global demand for meat and dairy products.
The first point to make is that our livestock producers, like our grain farmers, are world leaders in production methods.
We clearly have the space and the feed resources to greatly expand the industry.
The Saskatchewan farming system needs the opportunity for an expanded and profitable alternative to the dominant straight grain production.
The poultry, dairy and pig production systems are well developed and capable of linking directly into the global markets.
Although the beef sector has the quality product to satisfy world markets, it has yet to develop the sophisticated branding system required to compete globally.
The livestock industry may strike many as small compared to the export growth of lumber and potash, for example, but an enlarged and expanded livestock production and processing industry has a critical role in not only sustaining the rural economy, but also in creating a platform for growth and Saskatchewan's success.