* Banks not seen lending to money-losing industry
* High feed costs from drought causing losses
By Rod Nickel
WINNIPEG, Manitoba, Sept 17 (Reuters) - Money-losing hog farmers in Manitoba, hurt by high feed costs, need between C$130 million and C$150 million ($134 million-$155 million) in government loan guarantees to survive, the Western Canadian province’s biggest farm group said on Monday.
Severe drought in the United States has decimated crops, which has led to higher costs for feed grains and pushed North American hog farmers into steep losses.
Manitoba is Canada’s third-largest hog-producing province, after Quebec and Ontario. Canada is the world’s biggest exporter of live hogs, mainly to the United States, and the third-largest pork shipper.
Canada’s second-biggest hog farm operation, Big Sky Farms in Saskatchewan, entered receivership last week and another major hog farmer, Manitoba-based Puratone, received protection from creditors on Wednesday.
Banks have stopped lending money to hog farmers large and small, leaving them hard-pressed to survive until they see more favorable market conditions, possibly next spring, said Doug Chorney, president of Keystone Agricultural Producers, an organization that promotes the interests of the provinces’ farmers.
“We are on the verge of not just having a downturn here - this is an industry-killing experience that we’re going through,” Chorney told Reuters.
It costs C$170 to raise a pig for sale, but farmers are currently collecting no more than C$150 per hog, Chorney said.
As hog prices fall, so has the credit available to farmers, said Mike Hoffort, senior vice president of portfolio and credit risk for Farm Credit Canada, one of the country’s biggest farm lenders.
Most farmers who need credit are seeking operating loans, he said.
“A lot of our producers are experiencing cash-flow challenges for sure,” Hoffort said.
Canadian Agriculture Minister Gerry Ritz said the government will explore all assistance options under existing programs.
“We will continue to work with the hog industry and ensure that our programs help producers and processors achieve long-term stability,” he said in a statement to Reuters.
Ritz said on Friday that he would meet with farm lenders this week to assure them the hog industry has a bright future.
A spokesperson for the Manitoba government said it would maintain close contact with hog industry and federal officials in the coming weeks, and that it is important that any action not breach international trade obligations.
Chorney said the Manitoba Pork Council, which represents the province’s hog farmers, intends to meet soon with the province’s agriculture minister, Ron Kostyshyn.