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On
Dec. 15, 1994, the Western Producer printed an op ed piece I wrote about
the looming problems of expansion in the hog industry.
There was no attempt to deal with the problems of surface or ground
water pollution in the article.
It dealt mainly with the lowering of
prices through over production.
It
is almost 8 years since that article on big barns appeared.
It is really embarrassing to see how little attention was paid to
my warnings about the danger of expansion.
The
only bright spot in the whole affair is... I get to use the sweetest words
in the English language..... "I told you so".
We
have a lot more pigs than we had then and we are getting more.
That would be a natural consequence of expanding markets and
increasing profitability. And that was the forecast.
By those who knew.
Unfortunately
there has been an "oops".
It turns out more pigs and more profit seem to be incompatible.
Odd that never occurred to the experts.
Heads
of Pig Departments seem impervious to the ravages of doubt. Leading
swinechologists insist the difficulty of imparting new information to
these Pig Heads is universal. Something to do with their lack of any
perceptible degree of perception.
But
good news is on the horizon. Indisputable proof of the sheer stupidity of
making more pigs in order to make more money is at hand.
First
a small apology
to the people in Ag and Food.
When they suggested $1.46 kg as a figure to be used in projected
budgets I thought it might be too generous. Turns out they were spot on.
$1.46 for the ten years they used and $1.43 for the last 10 years.
$1.44kg over the last 20 years.
Of
course that isn't great. You can't buy a 1983 dollar with a 2002 dollar.
To
demonstrate the importance of dollar value over time we
take three identical pigs, at three different times. Each pig 85kg
dressed weight. Each pig index 106.
Let
the first pig represent the average return for the first five years of the
last twenty.
The second pig will represent the last five years of the current
period.
And the third pig will represent the market return as of 28 Oct.
2002.
Each settlement expressed in 2002 dollars.
| PIG |
PRICE
$/KG |
SUBSIDY |
RETURN |
IN
2002 $$$ |
HERBY
(84-88) |
$1.57 |
$0.25 |
$163.98 |
$245.97 |
BILLY
(98-02) |
$1.32 |
nil |
$118.80 |
$130.00 |
PETER
(RIP 28,10,02) |
$1.00 |
nil |
$090.10 |
$90.10 |
It
is true that an industry cannot be judged on the short term.
But in an attempt to be fair we have looked at almost 20 years.
And 2002 looks like it will set new records in futility. The lowest
prices since 1974, the most pigs ever, a record price for feed costs and
the most need for subsidization.
If
we had wanted to be sensationalist we could have compared an average 1982
model
to the same little piggie today. The 1982 hog...$296.75.
Today's (28 Oct. 2002 hog)....less than $90.00.
Both numbers in 2002 dollars.
I
really did not enjoy reporting on this train wreck.
Too many people have been hurt.
To all those who attempted to make a success of the business, my
sincere sympathy. I know what it is to load hogs and my wife knows
how to pull pigs.
Alice and I were lucky to get out in 1997.
I just wish the
business had gone better for those who are still trying.
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