The Honourable Pat Binns, Premier of Prince Edward Island, today announced a short-term pricing action plan to support the Island's vital hog industry. The provincial government, in cooperation with the Hog Board and Garden Province Meats, outlined a range of measures to provide financial support to producers following the recent collapse in hog prices.
The measures involve the enhancement of safety net programs, including the extension of eligibility under the Agriculture Disaster Insurance Program; additional incentives under the Swine Quality Improvement Program from the Department of Agriculture and Forestry and payments on all hogs from the Hog Board; deferred repayments under the Garden Province Meats loan program; and new low interest bridge financing of up to $100,000. The overall impact of these measures will be to provide cash flow relief of between $45-50 per hog.
Premier Binns said the price support action plan demonstrates the government's commitment to support the Island's hog industry. "This action plan recognizes the needs of Island hog producers during this very difficult time and it underlines the critical importance of reaching a long-term solution," he said. "I am hopeful the federal government will also recognize the urgent needs of the industry and provide additional contributions for safety net programs."
Premier Binns said that the provincial government will continue to work closely with the Hog Board and Garden Province Meats to bring stability to the industry for the long term.
Agriculture and Forestry Minister Eric Hammill said that hog producers have made major investments to improve quality and increase production, and those investments need to be protected.
Donald MacDonald, Chairman of the Hog Board, said the additional assistance is needed and welcomed. "I believe everyone recognizes that while additional support is forthcoming, it will not be sufficient should prices remain at these low levels," he said. "If current market conditions continue for too long, we will need to consider what other steps can be taken to ensure the survival of the hog industry."
For more information contact: Premier Pat Binns, (902) 368-4400 or Donald MacDonald, (902) 892-4201
Backgrounder
Fact Sheet - Short Term Pricing Action Plan
The recent collapse in hog prices has created serious financial difficulties for producers. Because of the importance of the hog industry to the province, and the processing jobs it creates, the Government of Prince Edward Island, in cooperation with the Hog Board and Garden Province Meats, has introduced a short-term action plan to address these difficulties.
Safety net provisions will be enhanced. The Department of Agriculture and Forestry, in cooperation with the federal government, provides a safety net package to producers. Under the Net Income Stabilization Account (NISA) producers are able to set funds aside in good times to draw upon in bad. Federal and provincial governments contribute approximately $6 million annually to producer NISA accounts in Prince Edward Island; this is matched by producers. As part of the overall safety net program, the Department of Agriculture and Forestry also offers the Agriculture Disaster Insurance Program (ADIP) which protects participating producers against large drops in income. The department will extend the eligibility date for ADIP to January 15, 1999. For the 1998 tax year, the cap on payments under ADIP has been increased from $50,000 to $70,000. Beginning April 1, 1999, the department will increase its contribution to ADIP and reduce the current enhancement to NISA.
Additional incentives will be provided under the Swine Quality Improvement Program. This program provides an incentive payment of $4 on hogs which meet certain weight and index targets and which are marketed through GPM. Effective November 16, the incentive will be increased by an additional $7.50 a hog by the Department of Agriculture and Forestry. The enhanced incentive program will continue for an estimated six months.
In addition, the Hog Board will provide a further $5 on all hogs from its own funds.
New financing provisions will be made available. At the present time, GPM administers a loan program to producers who market their hogs through the plant. Effective November 2, loan repayments under the program have been deferred until hog prices exceed $1.40/kg. In addition, beginning November 16, low interest bridge financing will be provided to producers based on production throughput. The maximum loan will be $100,000, with an interest rate of 4 percent. The amount of the loan (based on numbers of hogs) will be tied to market prices and will be reduced as prices rise. The loans will be made and administered by the Hog Board, and guaranteed by the provincial Lending Agency. They will be repayable from the proceeds of NISA and/or ADIP payments or through a checkoff as prices increase above $1.60/kg.
Further advocacy and support will be provided. The provincial government and the Hog Board will be meeting with the lending community on November 18 to provide its perspective on the current price situation and prospects for the hog industry and to gain its cooperation and support during this period. Following last week's meeting with federal and provincial ministers and industry representatives in Ottawa on the present farm income crisis, the provincial government will be requesting that the federal government provide additional contributions for safety net programs. Staff of the department's Farm Business Management Team will continue working with producers to develop and implement financial strategies.