Good afternoon, Mr. Chair. Thank you for the invitation to appear before the committee and for seeing Canadian pork producers as an important part of Canada's economy.
I'm Rick Bergmann, Canadian Pork Council chair and a producer from Manitoba. I will be sharing my time today with René Roy. He's a Canadian Pork Council vice-chair and a producer from Quebec.
I'm quite honoured to be part of the pork sector. I see my farm contributing to the rural community and the wider Canadian economy by providing food to Canadians and people around the world. With $4 billion in exports and a positive trade balance, Canada’s pork sector could play a key role in restarting the economy.
We have a great story to tell, but instead, I am here today because producers are not confident of the future they have in helping with the rebuild after COVID-19.
As René and I go through this presentation, remember this quote from William Jennings Bryan: “Burn down our cities and leave the farms, and your cities will spring up again, as if by magic, but destroy our farms and the grass will grow in the streets of every city in the country.”
This gentleman lived about a hundred years ago, and it's unfortunate that his wise words have become forgotten in many circles.
The Canadian Pork Council represents 7,000 producers from coast to coast. Combined, producers bring a GDP value of $24 billion to our great country of Canada, and we are a major employer.
Pork production is a diversified agricultural sector. All of that diversity has not been enough, though, to protect pork producers from being pushed into a crisis by COVID-19. Really, because of the current government program, producers are at their wits' end in this time when we are seeking meaningful help, help that will make a difference.
First and foremost, our current crisis is a cash crisis. That means farmers do not have the income they need to pay their bills, feed their animals and keep the lights on. We are trying to navigate market conditions, and they are incredibly volatile right now. The drop in our market price has been incredibly steep and the recovery is quite slow.
Our conservative estimates are that pork producers will lose, on average, about $30 a hog for every pig they sell in 2020. In some regions, that loss may be $50 an animal. This doesn't mean that pork producers will lose $30 on every animal they sell since the beginning of the crisis in April: It means that because of the damage done to the pork market, for every market hog that is sold in 2020 from January to December, farmers have lost or will lose about $30 a hog on average.
These losses are not sustainable at all. They will force farmers out of business. Unfortunately, the hardest hit will be the mid-sized family farm, the young farmer and those farms that have been struggling through the years of depressed prices as a result of the global trade war between China and the United States.
The U.S. government has recognized the hurt their producers have experienced over the past few years due to the trade war and, most recently, the impact of COVID-19. Canadian pork producers, forced to compete against this support, continue to remain at a disadvantage.
As farmers, to us the answer is extremely clear. Over 90 countries around the world knock on our door for valued Canadian pork, so it seems as though our government should do the same. Our food security is too important to leave in the hands of the rest of the world, and we have a good story to tell here. We've just got to get back at it.
I want to take a moment to clarify where COVID-19 has hit the farmers so hard and why we need your help.
Pork production in Canada is a just-in-time business. There are several business models, but for the most part, barns are built so that the sows are housed in a farrowing barn, where the piglets are born. When the piglets are weaned, they are moved to a different barn, and a new group of sows goes into that farrowing area after it is washed and disinfected.
The piglets are then moved through different facilities as they continue to grow. In some operations they will be sold at 15 pounds or at 50 pounds, as in my operation. These feeder pigs are then transferred to another facility where they're grown into 260- or 270-pound market animals, and away they go to the processing plants.
However, regardless of where you farm or what your business model is, these operations do not have the extra capacity to hold the animals. Barns are designed to refill as soon as a group of pigs is sold. COVID-19-related reductions in slaughter plants and slaughter plant capacity have meant that market-ready hogs aren't able to move out of the barn. This, in turn, means that the next batch of pigs cannot move forward, so you can understand the just-in-time philosophy that I just mentioned.
The backlog in the U.S. has been particularly bad. There they have seen processing plants close for extended periods. Given how connected our two industries are, the impact on U.S. prices has hit Canada hard for producers who export weaned pigs into the U.S. My farm, for example, has needed to give piglets away because we were not able to sell them and we needed to make room. It's a considerably important part of our marketplace. In 2019, the export of animals was valued at $250 million.
I'd like to invite my colleague René to carry on with the story.