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Ontario Pork sketches deregulation plan

Ontario Pork’s preliminary plan to carry out deregulation of its single marketing desk for hogs includes a to-do list going well past the April deadline asked of the hog marketing agency.

The agency said Monday that it has met its Jan. 15 deadline to submit a preliminary implementation plan to the Ontario Farm Products Marketing Commission (OFPMC), which in October 2008 ordered Ontario Pork to develop an plan to move from a mandatory marketing organization to one offering producers “choices in marketing methods.”

When that move happens, the agency would still have authority to “represent, and collect license fees from, producers of all classes of pigs, including weaners and breeding stock” and to address pork industry issues on hog farmers’ behalf.

But it will only be able to review and approve direct-supply contracts for hogs if either a buyer or a seller asks, and will be able to market pigs for producers on a fee-for-service basis.

The agency now has until March 1 to submit its final plan. OFPMC ordered that the bulk of the overhaul come into effect “in or about” April this year.

“This plan is high level at this time,” Ontario Pork said in its 133-page preliminary plan. “There are many more details to be considered before the final plan can be prepared and implemented.”

Said details range from establishing bylaws for a new, voluntary pork marketing agency, and arranging asset transfers from Ontario Pork to the new agency, to defining a new Ontario Pork Marketing agency’s services, governance model and staffing needs, dividing Ontario Pork’s office space into suites for two entities, and electing a new board.

Among other things, the agency said it will also still have to request a change in provincial regulations in order for the new marketing entity to still be named “Ontario Pork.”

Start dates

While some objectives under the plan are already works in progress, and start dates have been set for others, many have no start or end date listed.

Those include the development of a producer financial protection plan for the new entity; establishing budgets and service fee values for the new agency’s “universal” duties; defining which of Ontario Pork’s services would be “uploaded” to entities such as the provincial ag department or Canadian Pork Council; defining the information needed for mandatory price reporting; and having regulations amended to ensure compliance when the new entity collects pricing data.

The new “Ontario Pork” would be owned by all producers who fund the organization through a universal service fee. It would include three departments: industry services, financial services and communications/consumer marketing services. “It may be necessary to redefine the three departments as the structure of Ontario Pork is finalized,” the agency said.

The preliminary plan calls for the new entity’s board to be made up of producers who ship a minimum volume through Ontario Pork Marketing, drawn from “some geographical representation requirements to be determined at a later date.”

The new entity’s board would be cut from 14 to nine directors, and its number of councillors (currently elected at the county level) cut by 60 per cent to 80. Directors and councillors would serve three-year terms, up from the current two-year term.

“It is the objective of Ontario Pork that these changes be implemented for elections in 2010,” the agency wrote. “Elections in 2009 will follow the current structure.”

The purpose, vision and mission for both Ontario Pork and Ontario Pork Marketing would be reviewed before the new structure is implemented, the agency said. “Ontario Pork’s (current) board of directors will go through a strategic planning process in February 2009 to redefine Ontario Pork’s vision, mission and purpose,” the agency wrote.

Cost per hog

Ontario Pork calculates in its report that, based on the cost of all the services it provides apart from the single desk, it would charge producers a fee of about $1.24 per market hog.

That’s higher than any of the fees charged by other provinces’ agencies, which have also shed their monopolies. If an overhauled Ontario Pork were to collect another 25-cent fee per weaner pig, the market hog fee would only drop to $1.16 per hog, the agency said.

With that in mind, “Ontario Pork has to evaluate whether the value of all services warrants the related costs.”

Ontario’s pork production dropped about five per cent between 2003 and 2007, to 7.31 million head. In 2007, 65.4 per cent of production was processed in Ontario while 6.2 per cent was processed in other provinces, 14.6 per cent was exported as feeder pigs to the U.S. and 13.8 per cent was exported as slaughter hogs to the U.S.

From 2003 to 2007, Ontario Pork wrote in its plan, the percentage of pigs exported changed significantly, with fewer feeder pig exports and increased slaughter hog exports. “This increase can largely be attributed to overproduction of pigs in Ontario relative to slaughter capacity.”

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