The Canadian Pork Council is exploring the feasibility of a hedging program to help hog producers manage price volatility and cash flow needs.
Bev Shipley, MP for Lambton-Kent-Middlesex and chair of the Standing Committee on Agriculture and Agri-Food, announced federal funding of up to $169,530 for the project through the federal AgriRisk Initiatives program on Friday.
“I am pleased to see this project moving forward given the cyclical nature of hog markets,” said CPC chair Rick Bergmann. “Developing and having producers’ employ effective risk management has long been a topic of interest and priority for governments and the hog industry.”
Currently, Canadian pork producers can hedge prices through the CME in Chicago, but the council says there are barriers to them doing so. There are also forward pricing programs offered by processors to help producers manage price risk.
The CPC says the project will include gathering statistics on current forward pricing opportunities in various markets and anticipated demand for a program. The council will also look into why Canadian farmers tend to utilize hedging to a lesser extent than their American counterparts. In the end, the objective is to “develop a structure for a program to mitigate the risk of margin calls that would complement existing risk management tools.”
The council will be consulting with producers, financial institutions, packing plants, and organizations providing risk management services to producers.