Hard times for Ontario's mink farmers

Sunday, June 7, 2015

After several boom years, mink prices collapsed in 2014. Now only the favourable U.S. exchange rate is enabling the remaining mink farmers in the province to hang on

by MIKE BEAUDIN

Robert Ritchie never thought he would have to understand the world of geopolitics to succeed as a mink farmer. But, in recent years, Ritchie has learned that political events in Russia, global currency exchange rates, the price of oil – even the weather in China – all have had a direct impact on his livelihood.

Canada's mink farmers enjoyed a booming market from 2009 to 2013, reaping the profits from record-high prices and soaring demand tied to the rapidly growing middle class in China and, to a lesser extent, in Russia. The price for a pelt hit a record $100 in 2013. Some producers cashed in on 50 per cent profit margins.   

But the good times came to a crashing halt in 2014. A warm winter in China led to a decline in fur demand and an oversupply of mink. When the price of oil plunged and Russia became embroiled in the Ukraine, the Russian ruble plunged, making imported foreign goods such as mink unaffordable to most in that country.

Mink prices dropped by nearly half. Now the only thing saving Canadian mink ranchers from a total collapse is the lower loonie, which is also tied directly to the global oil market. Mink is sold in U.S dollars, so Canadian producers are getting around 20 per cent more on each mink they sell, depending on the currency exchange. With prices around US$65 and production costs averaging $60 CDN, Canadian producers are relying on exchange rates to make a profit.

"I admit that I do keep an eye on things like the Chinese weather and what's happening in Russia," says Ritchie, a past president of the Ontario Fur Breeders Association. "There's not a whole lot I can do about it, but they are concerns."

Ritchie is a third-generation mink farmer. His grandfather started the farm in the 1940s. Rob currently operates the farm with his father, Herb. They produce about 7,000 mink a year on their 50-acre operation, located near the small community of Elmvale in Simcoe County. Their operation is among the smaller ranches of the estimated 50 mink farms in Ontario.

Ritchie says his family has learned to adapt to the volatile fur market. In some ways, he sees the current price slump as a positive development.

"This will get rid of a lot of the over-supply in the market. It was the same back in the early 1990s. Back then, there were about 20 mink farmers in Simcoe County alone. Within two years, that number had dropped to two or three."

Walt Freeman, a mink farmer from eastern Ontario and president of the Ontario Fur Breeders Association, says most mink farmers in Ontario, especially those who invested when times were good, are hanging on thanks to the U.S. exchange rate.

"If somebody has allowed their pens and sheds to deteriorate and hasn't invested in their farm, they may now find themselves unable to make appropriate repairs or buy new equipment," says Freeman, who produces about 17,000 mink in a good year. "Interest rates are low, but you still have to pay – the bank doesn't wait long."

He says prices in 2015 haven't rebounded much, but at least 100 per cent of the fur at auction sold this year. Making the situation worse, the Chinese government last year enforced stiffer import duties on Chinese buyers, another blow to Canadian producers.

Farmers like Ritchie and Freeman, who have endured their share of boom-and-bust cycles over the years, knew the good times couldn't last. "Were we prepared or expecting it?  I hear the voice of my dad in my head and I have to say, yes," says Freeman. "After all these years of great prices, at some point we knew it had to fall."

Alan Herscovici, executive vice-president of the Montreal-based Fur Council of Canada, says he expect prices will rebound when some of the producers who invested in mink farming because of the resurgent prices decide to get out of the fur business. He says the industry is also buoyed by a continuing fashion trend toward mink with gloves, scarves, hats and accessories replacing full-length coats.

Like other producers, mink farmers have also had to address animal welfare concerns and some negative publicity from activists. As a result, the industry has adopted a voluntary code of practice to ensure minimum cage sizes and other standards of care. Freeman says he expects the code will be adopted by 2022.

"Looking in the future, the Canadian fur industry will remain viable," he says. 'Our prices will strengthen again, but that may be a long road." BF