Hog buyout auction delayed

Monday, October 26, 2009

by SUSAN MANN

The Canadian Pork Council has postponed the first tender auction of hog farm transition program bids for one week so it can clarify a number of recent registrations.

Council spokesman Gary Stordy says a number of registrations received last week were incomplete or needed clarification and follow up. Rather than excluding them, “we’re going to try to make sure those interested in participating in this first one have the opportunity.”

The auction will now take place Nov. 4. It was originally scheduled for Oct. 28. It’s the first in a series of tender auctions to be scheduled over the next two months.

Stordy says the delay may be inconvenient for some farmers but for others it’s a positive development because they may not have been able to participate in this first round since their forms weren’t complete. 

The number of farmers who registered to bid for the first auction isn’t final, says Stordy, explaining the Council, which is administering the program, is still working to get as many farmers through as possible.

Participants whose registrations to the program have been approved submit closed bids listing how much money they need from the program to stop all hog production at their facilities for three years.

Tenders will be awarded during the auctions to the lowest per animal unit bids received.

Catherine Scovil, Council associate executive director, says the federal government has made $37.5 million available now until March 31, 2010 and a second $37.5 million available from April 1, 2010 until March 31, 2011. All of the money will be allocated through tender auctions.

The bids are closed so the Council doesn’t know the dollar range of the per animal unit bids farmers are requesting, Stordy says. The range will be made public about a week after the first auction.

Farmers will be notified about a week after Nov. 4 either by fax or email about the outcome of their bid. Farmers whose bids weren’t accepted can compete in other tender auctions without having to reregister.

Scovil says there isn’t a maximum on individual payments but there is a maximum per animal unit equivalent bid set by the program’s management committee. The Council expects the number will vary with each tender and depend on the bids that have been submitted. BF

UPDATE: Oct. 28, 2009

BF: What is the dollar value the committee is assigning to the maximum per animal unit equivalent?

A: The maximum per animal unit equivalent will be 50 per cent over the average of the bids that have been submitted, says Catherine Scovil, associate director of the Canadian Pork Council. But the program administration has reserved the right to remove “unreasonable bids” from the bids that have been submitted. “We don’t want bids coming in for the sole purpose of increasing what that weighted average is.”

The maximum per animal unit equivalent will change with every tender auction.

BF: How do farmers know what to bid?

A: They have to look at their own operations and determine what they need as a total number to meet the requirements of the program, Scovil says. That will be different for each operation. The total value bid is converted to a per animal unit equivalent.

BF: What’s to prevent committee members from telling their friends the maximum per animal unit equivalent?

A: Information discussed by the management committee is to be kept confidential, Scovil says, and program officials believe it will be kept confidential. Also the maximum per animal unit equivalent will change with every tender auction. BF