IN A SEA OF CHEAP GRAIN":
The corporate takeover of Saskatchewan's hog production policy
By Cathy Holtslander
In 1976 there were 12,000 Saskatchewan farms that produced hogs. In
1996 there were approximately 2,200 hog farms, roughly 200 of which sold
over 1,000 pigs each. Today, Saskatchewan's hog industry is dominated by
four major hog producers: Big Sky, Community Pork Ventures (formerly the
Quadra Group), Heartland, and Stomp Farms, all of which use a confinement
feeding, liquid-manure production system that poses considerable
environmental and health risks.
Heartland and Big Sky are the 7th and 8th largest pork producers in
Canada, with 18,000 and 23,500 sows, respectively. Community Pork Ventures
has 13,000 sows on 18 sites. The Stomp farm houses 9,000 sows.
Saskatchewan's smaller independent operators, on the other hand, have lost
ground, and now function as residual suppliers to supplement the
"vertically integrated" system.
These dramatic changes to hog farming in Saskatchewan were not
accidental or the outcome of natural evolution, but the result of a
combination of government policy, corporate strategies, and pressure on
the industry due to environmental concerns and disease problems in other
parts of the world.
Florian Possberg, CEO of Big Sky Farms Inc., says: "We live in a
sea of cheap feed grain. This area should be a natural for expanding the
AgriVision 2000, a "think tank" funded by Sask Ag and Food,
the Royal Bank, Mitchell's Gourmet Foods, Big Sky Farms and others,
agrees, and calls for Saskatchewan to increase production ten-fold to 10
million hogs by 2008. How, why, and for whose benefit is this massive
expansion and industrialization of livestock production taking place?
The building blocks
When the Crow Benefit, the statutory freight rate for prairie grain
transportation, was abolished by the federal government in 1995, the
Saskatchewan government began looking for new ways to structure the
agriculture sector. In 1994, anticipating the loss of the Crow,
Saskatchewan Agriculture Minister Darryl Cunningham saw expanding the
livestock sector as a good strategy for adding value to low-priced feed
A series of building blocks for expanding the intensive hog industry in
Saskatchewan were designed and then implemented. In 1995, Saskatchewan
passed its "right to farm" legislation, the Agricultural
Operations Act, to protect intensive livestock operations from
"nuisance suits." This Act also effectively moved jurisdiction
over pollution from intensive livestock operations (ILOs) from the
Environment Department to the Agriculture Department.
In 1997, Agriculture Minister Eric Upshall imposed an end to the
"single desk" hog selling system, which was a mechanism to
ensure that all farmers could sell their hogs to--and packers could buy
hogs as needed from--the central agency. This democratically-controlled,
producer-run hog marketing system was dismantled in order to permit direct
contracting between the packer and producer. This change in hog marketing
was implemented to allow the meat processors to control the price and
supply of their primary input. Direct contracting between packing plants
and the largest hog producers made pricing and market access for small
producers much less reliable, to the extent that many were forced out of
A 1996 federal government report identified the Saskatchewan Farm
Security Act as an impediment to industrial-scale hog barn expansion. The
Act's rules made it more difficult for people who don't live in the
province to own more than 10 acres of farmland. But this barrier to hog
barn expansion was recently eliminated when the current government amended
the Act to open up ownership to Canadian non-resident individuals,
cooperatives and corporations on the same basis as Saskatchewan residents.
This amendment may well open the door to a successful NAFTA Chapter 11
challenge of the Act, which would mean that U.S. agri-business
corporations would be able to buy farmland on the same basis as Canadian
Thus the stage was set for the expansion of ILOs in Saskatchewan. Yet,
apparently, the advantages gained as a result of these structural changes
were not quite enough. So the biggest hog industry players were given even
more help from our government.
The money trail
Florian Possberg's success as CEO of Big Sky Farms Inc. has been
attributed to his skill as a farmer and his entrepreneurial spirit. Well,
perhaps, but he also has friends in high places and plenty of help from
taxpayers. The Saskatchewan government has ownership or control over 75%
of the equity in Big Sky Farms Inc. through the Crown Investments
Corporation, the Saskatchewan Government Growth Fund, and Crown Life.
Possberg actually owns less than 5% of the company.
LuAnn Mitchell, heir to the Mendel family's meat-packing dynasty, was
in charge of Mitchell's Gourmet Foods Inc., the 17th largest business in
the province, until November 2002 when she sold her shares. Well, that is
somewhat open to question. She actually sold control of the company in
April 1999, less than a year after the death of her husband, Fred
Mitchell, to the Schneider Corporation, the Ontario-based meat-packing
company which was already majority owned by Smithfield Foods Inc. of
Virginia. The sale agreement included a timeline and process that
guaranteed that Smithfield, via Schneider, would own all the shares in
Mitchell's by 2007. By the end of 1999, Smithfield Foods was highlighting
its Schneider and Mitchell's purchases as success stories in its corporate
strategy of expanding market share by acquiring "under-priced private
Big Sky Farms and Mitchell's are closely linked, too. In 1997, Big Sky
contracted to sell 85% of its production to Mitchell's Gourmet Foods. In
return, Mitchell's invested $5 million in Big Sky to build the
controversial 2,500-sow (60,000 market hog production) operation at
Kelvington. In 2000, the Saskatchewan government invested $15 million,
plus $8 million from Crown Life, in Big Sky to build two 5,000 sow
operations (120,000 market hogs each per year) at Rama and at Ogema.
Smithfield clearly aims to reduce its risk by controlling as much of the
hog supply as possible, and its relationship with Big Sky certainly
achieves this for the company in Saskatchewan.
We are now experiencing a major collapse in the price of hogs.
Increased costs have lowered returns to about $65 below cost on almost 2
million hogs, which works out to a revenue shortfall in the neighbourhood
of $130 million. The provincial government's wholehearted commitment to
industrial hog production means that huge sums of public money are being
diverted in order to protect these massive hog barn investments instead of
being used to support other more environmentally, socially and
economically sound priorities.
You may be able to get more money for your grain by feeding it to a pig
first, but you have to own the pig to make the buck.
"Value-added" industries that use grain as an input depend on
low grain prices for their profitability. Farmers are not getting rich
selling cheap barley to the hog barns. The combined political influence
and market power of the industrial livestock sector and the availability
of cheap American corn in Western Canada will exacerbate downward pressure
on Saskatchewan grain prices.
Over the past decade, the livestock industry in Saskatchewan has been
converted from being part of a truly diversified on-farm production system
where the farmers made the decisions and lived with the consequences, to
becoming a heavily subsidized, corporate/government-controlled industrial
system that depends on keeping grain prices and packing plant wages low,
and having access to cheap land and lax enforcement of environmental
regulations. Farmers, workers, taxpayers and the land are paying the price
while absentee landlords and investors cash in.
Somehow we seem to have bought the idea that the family farm is passe,
that rural communities are good places to leave, and that we are too poor
and too backward to solve our own problems. Farmers should just get a job
and move to the city while we all look to the corporate sector for
salvation. There is, we're told, no other choice.
Yet, in other places people are making a rural economy work and are
integrating livestock into an economically, environmentally and socially
sound framework. Many states and counties in the U.S. have passed
anti-corporate farming laws, or laws that prohibit meat packers from
owning livestock. Sweden outlawed the routine use of antibiotics for hogs,
and has since built its hog sector with profitable small- to medium-scale
operations, using practices that support animal health. The European Union
is promoting organic agriculture as part of its policy to support the
"multi-functionality" of agriculture. There truly are choices.
In Saskatchewan, during the big price crash of 1998 and 1999, family
farmers and independent butchers joined with inner city consumers to set
up Pork Links. Farmers sold hogs for more than they'd receive from the
packers, the butchers got a fair price for their skill and labour, and
city folks bought their pork for less than they'd pay at the grocery
store. If this can be done on a small scale in response to a crisis
situation, it can surely be done at a provincial policy level, too.
Why not have a livestock policy that focuses on quality by developing
markets based on certified humane and environmentally sound production
standards on family farms? Why not set up inter-generational transition
programs to bring young farmers into mixed farming, using their own
livestock herds as a means to offset low grain prices, as is being done in
rural Nebraska? Why not build on Saskatchewan's long tradition of
cooperatives and set up farmer-owned community-based livestock enterprises
along the lines of Missouri's Patchwork Family Farms?
Times are tough, and the world is a pretty complicated place these
days. But it is still hard to comprehend the rationale for an agriculture
policy that has the citizens of a so-called "have-not" province
like Saskatchewan subsidizing Smithfield Foods, the biggest pork sector
transnational corporation in the world, instead of using the wealth of our
land, resources and ingenuity to create real long-term wealth, health and
prosperity for our own communities.
(Cathy Holtslander is an environmental activist based in
Saskatchewan and a Research Associate for the CCPA's Saskatchewan Office.)
Taken from The CCPA Monitor, April 2003
Canadian Centre for Policy Alternatives