Olymel is in such dire pork-slaugther straits that hog production in Quebec and Ontario is in turmoil.
Olymel has told the Quebec pork marketing board that it needs to cut hog purchases by 10 to 25 per cent.
This after it announced in October, 2021, that it would cut annual purchases by 530,000 hogs, last October by another 250,000 and as of Feb. 23 a planned cut of 885,000 hogs.
“I don’t think this is a negotiating ploy,” market analyst Kevin Grier told a gathering of about 100 Ontario pork producers and industry participants at a meeting recently at Elora.
It is leaving Ontario looking for a new home for hogs that have been going to one of Olymel’s four plants in Quebec. It has another at Red Deer, Alta.
Ontario packers buy about 90,000 to 100,000 hogs from Ontario producers every week, but they are producing about 125,000 a week.
Before the planned Feb. 23 cut, Ontario has been sending about 10,000 hogs a week to Quebec, some of them to du Breton which is also cutting back and focusing on organic and “all natural” pork.
Under normal conditions, Grier said exports to the U.S. and Manitoba were zero. As of now, about 20,000 a week are going to U.S. plants and another 6,000 are going to the Maple Leaf Foods plant at Brandon, Man.
It has been a logistical challenge, the Ontario producers were told.
“None of this is sustainable. It’s just a mess,” said Grier.
But Quebec is in worse shape because it hasn’t got enough trucks and infrastructure to get into moving market hogs out of the province.
Its producers have, instead, been ramping up exports of weaner pigs.
Ontario has been sending about 60 per cent of its processed pork exports to the United States, but that doesn’t count substantial exports of weaner pigs.
Grier said Ontario is in a good competitive position to increase pork production, but there has been a long-standing reluctance by pork packers to build new plants here.
Conestoga Meat Packers, which is owned by farmers, has been a remarkable success story and now processes about 8,000 hogs a day.
Sofina’s plant at Burlington takes up to 9,000 a week and both can take more if and when they add a Saturday shift, Grier said.
Blair Cressman, marketing division manager for Ontario Pork, said Conestoga Meats recently purchased land adjoining its plant east of Breslau. That’s a signal it might be planning an expansion, but no plans have been floated.
Domingo’s is another farmer-owned pork packing plant that is taking up to 9,000 hogs a week.
In Quebec, Olymel and the pork board are at a negotiating stand-off. The farmers took a cut of $40 a hog during the COVID-19 pandemic, but the two can’t agree on a new discount amount. The provincial body that supervises marketing board has become involved in trying to negotiate a new deal.
A significant challenge is a severe lack of workers for Olymel’s packing plants. Part of the deficit has been filled with temporary foreign workers, but far from enough to run the plants at capacity.
Hog packing has also been a money-losing business for more than a year, Grier said. The industry’s profits are notoriously cyclical.
The Quebec pork board has called for a 20 per cent across-the-board production cut, but Grier said that’s not acceptable to Olymel which has a significant investment in large-scale hog production and has converted housing to meet wholesale customers’ demands for crate-free facilities.
Those barns need to be run at or very close to capacity to be sustainable.
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That leaves independent producers to scale back production. Some are only viable because of a provincial government price support program (ASRA) and if that support is reduced, he estimates half of the hog farms would close.
Few of the independent producers have invested in converting to housing without crates for gestating sows and they could soon find there are no packing plants willing to buy their hogs, he said. They may either decide, or be forced, to quit.
Nor is Quebec hog production, as a whole, as competitive as Ontario because it depends on purchased feeds, much of it from out of province, whereas Ontario is competitive because feed is either grown on farm or purchased locally.
That is also a precautionary note for Ontario hog producers because they could find "there are no shackles for their hogs," Grier said.
Grier said another threat remains trade action by the United States. Federal politicians in Washington are again threatening to legislate retail pork labelling to reveal whether it’s from hogs or pork brought in from Canada.
From past experience, that would depress the price for Canadian hogs to compensate for the costs and challenges involved in separating slaughter, processing and packaging to comply with the Country Of Origin labeling requirements.
Canada has won disputes-settling challenges to previous U.S. Country of Origin Labeling requirements, but not until after losing billions in depressed prices and tens of millions to hire lawyers and consultants to argue the Canadian case to the disputes-settling panels.
