Quality Meat Packers of Toronto has gained court protection from its creditors to gain time to reorganize its finances.
The move might leave creditors short of money, including farmers who have sold pigs to the company.
Unlike beef, there is no government-run financial protection plan or fund to help hog farmers who are left in the lurch when a packer can’t pay.
The directors of the Ontario Pork marketing board considered - and rejected - setting up a financial protection plan in 2012 when its monopoly on marketing hogs ended and the market was thrown open to competition.
When the board held a monopoly, it guaranteed payment and stepped in a number of times when smaller-scale packers were bankrupted.
Quality Meat Packers is, however, a major player – the second-largest hog packer in Ontario and one of only four federally-inspected plants approved to export pork.
Quality has a number of high-paying export customers, most prominently Japan.
The company’s Great Lakes plant at Mitchell is not part of the court protection, so farmers who have sold their hogs to that company are not affected at this point.
“It’s the big volatility in pork prices, hog prices that the market’s experiencing right now. That’s been the management challenge,” Jim Gracie, marketing vice-president of Quality Meat, told the Toronto Globe and Mail.
Quality Meat is owned by the Schwartz family, has been in business since 1931 and the plant is now surrounded by housing, including a high-rise condominium. The local residents have hassled the company about animal welfare and odours.
The province’s other major hog-packing plant in Burlington has changed hands three times in recent years – from Maple Leaf Foods Inc. to a Miami-based investment company and then to Sofina Foods of Markham.