Restructuring for Canadian Hog Industry Announced

August 17, 2009, Winnipeg – The Government of Canada is delivering a comprehensive restructuring plan for pork producers by investing in key marketing initiatives to get more customers buying Canadian pork, providing government-backed credit to help viable operations weather the current economic uncertainty and helping struggling operations to transition out of the industry.

"We know Canadian hog producers can become profitable again, but we have to face tough realities to make our pork industry lean and competitive," said Agriculture Minister Gerry Ritz. "Some operations simply aren't viable any more and we are going to help them transition out of the industry and reduce production. Some operations need access to credit to weather the current economic storm and we are providing government-backed loans to help them restructure. Farmers want to make their living in the marketplace and we're investing in marketing to find new customers for Canadian pork and make our pork industry successful for the long term."
 
The new initiatives being announced include:

• An International Pork Marketing Fund of $17 million for market research, promotion and access initiatives to find new customers for Canadian pork products.

• Long-term loans with government-backed credit that financial institutions can offer to allow viable hog operations to restructure their businesses. These long-term loans will be provided at market rates. Producers with sound business plans will be able to access short-term credit for operating costs such as feed and payroll.

• A Hog Farm Transition Program to allow producers to tender bids for the amount of funding they need to transition out of the hog industry and cease hog production for at least three years. This program will invest up to $75 million to gradually reduce production and oversupply issues.

 
Agriculture and Agri-Food Canada officials are working closely with the pork industry and financial institutions to finalize program details. These new initiatives respect Canada's commitments made under international trade agreements and ensure Canadian pork producers will continue to have access to market opportunities around the world.
 
International Pork Marketing Fund

The International Pork Marketing Fund will provide $17 million in funding to Canada Pork International to bolster critical market development and activities to capture greater value from export markets, and to help address the pork exports losses resulting from trade restrictions. The objective is to undertake strategic activities to recover markets lost due to the H1N1 virus, reposition for sales of higher valued products, to build markets and gain recognition for Canadian pork products, to increase market access for Canadian pork products, and to enhance export capacity in response to industry-identified needs.

Long-Term Loans

Long-term loans will be provided by lending organizations. The Government of Canada will share the loan loss risk. Lending organizations will be required to ensure that the borrower had a credible business plan demonstrating potential to maintain a viable agricultural operation that will allow for repayment. The loans would be first used to reimburse any outstanding Advance Payments Program (APP) emergency advances under the 2008 stay of default, if the borrower holds such an advance. Additional funds could be used to address liquidity issues or make the investments required to achieve long-term profitability. Overall program parameters and details will be negotiated with stakeholders and lending organizations.

Hog Farm Transition Program

The Hog Farm Transition Program will provide up to $75 million to help producers who wish to transition out of the industry. Hog producers who agree to keep their barns out of production for a period of at least 3 years would be invited to bid for a place in the Hog Industry Transition Program. In exchange for a contract to keep barns empty and ensure that it was not used in any way in hog production for a period of 3 years, the producer would accept a negotiated amount, based on the annual productive capacity of the barn. Bids would include a timeline for disposing of current herds. Administrators will accept bids based on cost impact and an orderly flow of animals to market.

Detailed program information will become available over the next few weeks. For more information, visit www.agr.gc.ca .