Alternative Live Hog Pricing Options Encouraged28 October 2013
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CANADA - According to the general manager of h@ms Marketing Services, Canadian pork processors should consider formalising alternative live hog pricing options in the event of future suspensions of USDA's tracking of hog pricing information, writes Bruce Cochrane.
As a result of the partial US government shutdown the US Department of Agriculture's tracking of hog pricing information used by industry to establish daily live hog prices were suspended for just over two weeks forcing North American pork processors to find alternative hog pricing strategies.
H@ms marketing Services general manager Perry Mohr says a "made in Canada price" has been discussed for a number of years but in order to adapt such a price the Canadian industry would need to make major changes.
Perry Mohr-h@ms Marketing Services
The structure I think of the industry would need to change significantly.
What I mean by that is, I believe that the industry exports roughly 40 per cent of what we produce.
In order to have a made in Canada price ideally you wouldn't be exporting nearly that amount and the domestic market would have a much bigger impact on local hog prices.
Because we're so heavily reliant on exports right now it just simply isn't practical I believe to look at made in Canada pricing.
Having said that, what I do think is going to happen in the future and we all negotiate contracts and I think the latest developments will make us proactive in establishing within the terms and conditions of a contract what kind of pricing mechanisms we will use in the event that this information does not become available again.
I think we will be much more formal than we have been in the past in having that actually set out within the contractual agreements that we sign.
Despite the uncertainty created by the suspension of USDA's tracking of hog pricing information Mohr believes producers were paid fairly for their hogs and he's confident how hog prices are paid can be fine tuned in the event this happens again.
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