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NDP and Crocus Invest in Intensive Hog Operations

The rapid expansion of Manitoba's hog industry has been a source of controversy for years, pitting community against community and neighbour against neighbour. While some, including some of the leading agricultural experts in the province, have hailed the industry's development as a saving grace for rural areas on the verge of collapse, others, including thousands of rural residents, have protested the high environmental and health costs associated with the location of massive hog barns in or near their communities.

Precisely what those costs have been is still being debated. However, as anti-hog barn activists have pointed out, this debate is taking place while the industry continues to expand, making it something of a mockery.

There are now almost three million hogs being farmed in Manitoba, (that is approximately three swine for each person) and this number is expected to increase in the years ahead as the industry's rapid growth continues. Between 1996 and 2001, the number of hogs grew by 43 per cent. The same period saw the expansion of the Maple Leaf plant in Brandon and the Schneider's plant in Winnipeg. In one decade, hogs have gone from being a minor part of the provincial economy to a $1 billion-a-year industry that is now the province's largest agricultural industry.

This was precisely the plan when the industry started to expand. After the elimination of the Crow rate, grain transportation costs increased sharply at the same time that international grain prices were falling. As a result, hundreds of family farms which had grown grain for generations went out of business. The impact on rural communities was devastating and hog production was seen as the remedy.

The expansion of the hog industry would not have been possible without massive public investment. This took the form of both direct capital investment as well as providing loan guarantees and necessary infrastructure. The main beneficiaries of this investment were not, however, those family farmers who were ruined by the elimination of the Crow rate. Maple Leaf Meats was promised $11 million to build their slaughterhouse and packing plant in Brandon, and received nearly double that amount from the previous Conservative government. Not to be outdone, the NDP government handed J.M. Schneider (owned by the U.S. pork agri-business firm Smithfield Foods Inc.) $9.2 million to expand their Winnipeg plant.

The Crocus Investment Fund, a labour-backed investment fund, has also been in on the game. In its 2001 annual report, Crocus praised Turtle Mountain Pork Limited Partnership, which is expanding in the Killarney area, with the help of $800,000 from Crocus. Turtle Mountain Pork is owned by Dynamic Pork, the brainchild of grain company N. M. Paterson & Sons. The Crocus annual report quotes Andrew Paterson, Chairman of Dynamic Pork, as saying the company plans to continue expanding. "This is only the start. We hope to be one of the larger marketers of hogs in the province in the near future. We believe we have the right production model."

The Dynamic Pork "production model" is fairly simple - it is a network contract hog farming operation. Dynamic has a 10 per cent equity stake in each network, with the remaining 90 per cent owned by local farmers and investors. The network owns the breeding stock and market hogs from birth to market, and contracts with hog producers who own and operate the barns. The Dynamic Pork business plan is based on annual production of at least 37,000 hogs. The feeder barns feed the hogs with grain provided by the feed toll mill FeedMax, owned by N. M. Paterson, which opened in the Killarney area in the fall of 2001. The network pays the sow and feeder barn owners a fixed rate for caring for the hogs, while the barn operators (individual farmers and investors) are responsible for the disposal of all waste generated by the operations. This model has been so successful for Dynamic Pork that according to Paterson, they may eventually be marketing more than half a million hogs a year through it.

Crocus' investment in Dynamic Pork has generated controversy throughout rural Manitoba. Jobs created in the hog industry are notoriously low-paid; Maple Leaf, unable to recruit workers in Canada, has now started bringing workers for its Brandon plant in from Mexico for two-year contracts. The jobs created are also notoriously unsafe; the hog industry's injury rate is about 25 per cent, which means one in four workers can expect to be injured on the job in any particular year.

In addition, there are serious environmental impacts. The latest study prepared for the Manitoba government by AXYS Agronomics concluded hog expansion has put groundwater sources in dozens of rural communities in danger of nitrate contamination. Nitrate has been linked to health problems in babies and cancer and thyroid problems. While the report focuses on the problem in southeastern Manitoba, where hog production has expanded the fastest, it also sounds cautionary notes for western Manitoba, including Killarney. These municipalities face the risk of phosphorus from fertilizer and nitrates from hog manure ending up in their streams, as the hilly ground makes runoff more likely.