Ontario's Abattoir Shortage: Farmers turn to community-driven solutions

Tuesday, March 4, 2014

With 100 of the 230 provincially licensed abattoirs gone since 2000, the lack of slaughter capacity has become a concern. But getting commitment from farmers to supply new joint ventures or co-operatives will be key to their success

by MARY BAXTER

In an April 2013 report studying livestock processing in Perth County, University of Guelph researchers noted that Ontario's producers find it increasingly difficult to access slaughter services. (See one producer's struggle to find slaughter facilities, page 16.)

For anyone involved in the industry, the observation is hardly breaking news. Farmers and meat processors have been sounding the alarm about the loss of local abattoir capacity since the mid-2000s, when provincial and federal governments brought in rigorous changes to meat processing regulation to address food safety. In turn, Ontario lost nearly 100 of the 230 provincially licensed abattoirs it had in 2000.

As the demand for local food increases, the need to protect and build abattoir capacity in Ontario grows more acute. Farmers, in turn, are fostering community-driven solutions. That was the approach proposed in a 2013 feasibility study for a federally licensed abattoir to serve eastern Ontario commissioned by the Durham Region Cattlemen's Association and conducted by consulting firm Mallot Creek Group Inc. Currently, there is no federal multi-species abattoir in the region, defined in the study as the region east of Hwy 400 to the Quebec border, or in nearby Toronto. The study proposed farmers form a new generation co-operative to establish a plant in partnership with an existing processor.

Kevin Kemp, the association's president and owner of a Blackstock mixed farming operation that includes cattle and some chicken, eggs and pork as well as an off-farm retail store, says the advantage of a community approach would be securing commitment from farmers to supply the plant – a key requirement for success.

"If you've got people who are invested in it, then I think they're going to make sure that they send the product there, as opposed to sending it elsewhere," he says. He adds that having such a plant would provide producers benefits ranging from the ability to access new markets to reducing transportation costs.

Michael Di Minno, who owns Windcrest Meat Packers near Port Perry, one of the potential partner processors identified in the feasibility study, is now working with a steering committee representing the different livestock commodities to explore how to implement the plan. If it goes ahead, he will put up the land and split the cost with farmers – an estimated $2.6 million for the 3,888-square-foot development Mallot Creek proposes. Provincial and federal funding would be sought as well.

Di Minno says a partnership to develop a new abattoir would help him to access government funds to replace his 30-year-old facility. He could apply on his own, but a partnership that involves all aspects of the food production chain makes for a better funding case, he explains.

His plant is already busy – "we kill five days a week." Yet upgrades are needed to obtain the coveted federal licensing. With such licensing in place, the product he processes could be sold across the country as well as locally.

Perhaps even more crucial is being able to add automation to make the job easier for existing employees, who are getting older, and to attract new employees. Retaining labour is vital, he explains. He's had only one new hire in recent years. "The rest have all been here for 10 years or more." A drop in staffing levels would mean he'd have to choose between providing custom orders or serving one of his biggest customers. "That's the dilemma."

Building new is a must for adding automated equipment and ensuring the building meets federal specifications. "If there's a future here, I really need a new plant," he says.

An end market for a new facility is not a problem. With Toronto next door and its proximity to Hwy 401, the region has access to millions of consumers. The study estimates the facility could handle 10 per cent of the region's current supply of cattle, veal, hogs, sheep/lamb and goats – enough to support processing 500 to 700 animals of all species a week. Working with an existing processor minimizes other abattoirs' customer loss.

Not-for-profit approach
Efforts that have already taken place in northern Ontario, however, suggest there's way more to building a successful community abattoir than building infrastructure.

The Rainy River District Regional Abattoir Inc. began operations in Emo, northwestern Ontario, in 2010. The area had been without a slaughter plant since the mid-1990s.

The local farm community was keen to revive the service. But weather damage quashed the possibility of retrofitting an existing building and efforts to pursue a private sector proposal fell through. So they established the not-for-profit corporation, sold more than 100 memberships and split the $2.2 million plant price tag equally between local contributions, provincial funding and a forgivable federal loan.

Four years later, there's progress, says Bill Darby, the not-for-profit corporation's president and a local elk producer, but the plant struggles.

There is no problem with capacity. "We could do 50 pigs a day," Darby says, noting that the 3,800-square-foot plant could technically operate five days a week. But, until 2013, it averaged one day a week (for the last half of 2013 it operated more frequently at two days a week).

Initially, the group was confident it could reach its modest target of 800 beef animal unit equivalents a year. The number was based on commitments farmers made soon after the bovine spongiform encephalopathy (BSE) crisis hit when beef prices had plummeted. By 2010, when the abattoir was launched, interest in a local venue waned, as did slaughter commitments. The business failure of one of the key players, a large-scale elk producer, was another blow.

Then came stringent new regulations about disposing of government-specified risk materials (SRMs) in older cows. (SRMs are materials such as brain and spinal matter thought to house the prion proteins that cause BSE.) To make ends meet, they had to charge higher prices – as much as $50 more per cow aged over 30 months – than their nearest competitor, two and a half hours away in Dryden.

"It's significant," Darby acknowledges, but "that's just what it costs." Existing abattoirs don't have to pay down the capital investment involved in developing a new facility. And the Rainy River plant just doesn't have the processing volume to achieve the efficiencies of scale needed to offset the cost of processing SRMs. Nor does it have the equipment and space to meet federal regulations to process them, and so must send them to Winnipeg.

Moreover, processors often subsidize the costs of slaughter with value-added activities, such as cutting and wrapping, Darby says. Rainy River, however, only offers primary processing and chilling.

Juggling staff is an ongoing challenge. There are nine part-time employees. Many of the staff work other jobs in the summer, so volunteers – Darby is often one of them – come in to help.

The abattoir has been successful in attracting new buyers, such as a wholesaler in Thunder Bay, a four-hour drive away, as well as the local hospital and long-term care facility. Farmer-owned butcher shop Rainy River Meats, also in Emo and launched in 2010, markets the local product the abattoir helps to produce throughout the region. Perhaps the most encouraging sign was last year's processing numbers: 600 animal units – 165 more than what they processed in 2012.

Vital component
Like the Rainy River abattoir, the Manitoulin Island Community Abattoir, launched last year as a 50-member new generation co-operative, seeks to replace a local service lost in the mid-1990s. (There is one privately owned provincially licensed facility on the island that primarily serves the needs of its owner, Max Burt, who operates a mixed farm and on-farm retail store.) Barely a year out, it has also encountered challenges.

Birgit Martin, chair of the abattoir's board, describes the $1.6 million abattoir as a vital component for completing the network to transfer locally produced food into the hands of local consumers. Not only would it allow farmers to deliver product under their own brands, but it will also play a key role in developing the island producers' regional brand, "Pure Island, Pure Taste."

"We're very excited that it's done," she says. Demand for local island products are growing, she explains.

Like the Rainy River farm community, the Manitoulin Island farmers initially explored expanding an existing building, but decided it wasn't feasible. The new facility is located near Providence Bay on the island's south shore. Many of the problems the Rainy River abattoir faced appear to be addressed.

For example, although the plant only provides "kill and chill" service, it has added secondary processing by buying a butcher shop, Papa's Meats & Deli, a few minutes' drive away. A composting facility and enough land at the 10-acre slaughterhouse property significantly reduce the cost of handling SRMs. And the island's largest beef producer, Blue Goose Pure Foods Inc., provides a steady volume of product. Blue Goose currently schedules one kill day a month but plans weekly kills as its production volume grows.

Martin says the plant could kill 15 to 20 beef cattle a day and could technically kill three days a week, although the goal is to have it in operation one day a week.

Yet staffing, as in Rainy River, presents unforeseen hurdles. Initially, the co-operative hired Joan and David Brady, former farmers near Grand Bend, to manage the entire operation. In September, the co-operative stepped into the management role.

"We weren't progressing towards our plan," explains Martin. A butcher out of Little Current is pitching in temporarily at the plant and others have been hired to help out with the shop. The co-op was advertising for managers of both locations last fall.

At Creative Meats in Warren, east of the island, manager Gilles Simon eyes the Manitoulin plant's progress. The business he owns with others has lost about 60 beef carcasses a year to the Manitoulin plant. "Obviously it hurts," he says. But "you can't blame them. Do they really want to drive their animals three hours?"

Simon trained some of the Manitoulin plant staff. He's heard the island facility is built well. But quality premises likely won't mitigate all of the growing pains. Added costs of operation due partly to lack of experience can be expected, he says. Indeed, production volume at the island's abattoir day-a-week slaughter is less than 10 animals – not even half the amount processed in the same time at Creative Meats.

Another challenge Simon sees is the separation of primary and secondary operations. Moving meat costs money, even if the distances are short, he observes. Two locations duplicate overhead costs, such as hydro.

Northern joint venture
Simon's business is also the outcome of a community-based solution to address many of the same needs as those at play in the development of the other two northern Ontario abattoirs. It launched in 2008 as a joint venture between the Sudbury West Nipissing Meat Producers, currently a 26-member new generation co-operative, and the owners of the Warren business.

"We don't have a choice; we need it," says Adrian Verhoeven, the co-operative's chairman and a beef producer who raises his animals to finish. The majority of his animals go to the freezer trade, as do those of the other producers involved in the venture, he explains.

The partnership between the business and the farmer co-operative provided the cash to upgrade the business' existing slaughter facilities, closed since 2000. Each participating farmer chipped in $3,000, says Simon. After 10 years, Creative Meats has the option of returning the farmers' money and continuing on its own. In the meantime, any slaughterhouse net profits go to the co-op's members, and they receive a discount on kill and cutting fees.

Both sides say the arrangement works. For co-op members, there's the assurance of local slaughter capacity for their animals. There is also greater control over processing quality without having to get involved in the daily nitty-gritty of processing.

"We realized ahead of time it was ludicrous to think we can run it ourselves," says Verhoeven.

For Creative Meats, there's a steady flow of customers for the slaughter service that now makes up about 75 per cent of the entire business. Easy access to product has also given the retail operation a competitive advantage in the burgeoning local food market.

"I bet you we get calls every day for local sides of beef," Simon says. "We even have a restaurant owner in Sudbury who drives all the way out here to get ground beef."

Like the Manitoulin abattoir, Creative Meats slaughters only one day a week; cutting, wrapping and further processing occupy the rest of the week. Employees are long-term and their experience makes a good base for training others. "We try to hire local," Simon says. "We find that if you hire a local person, they'll stick around more."

Even so, profit margins are tight. The business plan had initially projected the partnership could expect up to $50 for hides, a major revenue stream. But the year the slaughter operations restarted, individual hide prices dropped to $2. Now, hydro costs are the headache, Simon says. "There's always something every year and it chews into your profit."

Moreover, business growth has meant their facility has reached capacity, and expansion or building new may be needed to keep up with the growth.

The Sudbury West Nipissing venture is the one that most resembles Mallot Creek's proposal for the Durham Region. But there's still a very long row to hoe before the eastern Ontario venture grows into a reality.

So far, a steering committee with representation from different livestock groups has been struck to try to implement the idea. The committee met for the third time in January. Andrew Frew, a hog and mixed cash crop producer near Nestleton, is its chair.

"We're still digesting this Mallot Creek report," he says. There are many questions to be answered before they can even begin to think about physical infrastructure. Who would be interested in being part of the system? Who would be interested in buying product? What impact might federal certification have on the local food production chain?

Nevertheless, there is recognition within the community that producers need to be proactive somehow to deal with aging slaughter infrastructure and maintaining local production "so you don't have to drive four hours to get your beef butchered," Frew says.

Commitment crucial
Finding solutions, however, will take time. Frew notes that members of the Progressive Pork Producers co-operative held "hundreds of meetings before they got anywhere." (Last year, the 32-year-old co-operative's Breslau processing plant, Conestoga Meat Packers Ltd., which processes 14,000 hogs a week, announced a major addition to its cooler space so it could expand production.)

Di Minno senses it might not be easy to reach agreement between all of the players to build a new plant. At the November meeting, he fielded a question about why another abattoir didn't apply for funding. Accepting the players involved will be key for the venture to move ahead, he says.

A June 2013 study by Oregon State University and Iowa State University researchers concurs that commitment is crucial. Without it, you can't ensure the vitality of local processing infrastructure, assert the study's authors, Lauren Gwin and Arion Thiboumery.

Both farmers and processors must shift their perception of their relationship from "‘convenience' to ‘commitment'" – from regarding it as a "series of independent transactions, conducted at arm's length, to a longer-run interdependence." There's no room for attitudes such as "‘I'll call you when I have animals to process'" or "‘I'll process for you if I have an opening,'" they say.

Commitment not only between the co-operative and the processor but also among the farmers themselves was the secret to the Sudbury West Nipissing venture's success, says Verhoeven. But it was a hard-won commitment. "You probably know the old story: you'll never get four farmers to agree on anything. Shoot three and hope the last one doesn't commit suicide so he doesn't argue with himself. Well, I got 26 to agree to it."  

At Rainy River, they've tried to introduce incentives to foster commitment. To be first in line for bookings, for example, farmers must be a member and have animal commitments (an annual charge tied to the number of animals a farmer projects he will process through the abattoir) for the animals that are sent. Non-members pay more money and are last in line for bookings. But that extra cost is applied towards a cost-saving membership.

Darby says the arrangement was working but, as livestock prices climb higher, sending animals in bulk to Winnipeg is becoming more appealing to some producers than going through the abattoir and doing the extra work of arranging sales. If farmers don't fulfill their commitments, how do you penalize them? "We need friendly relations with them; we want them to bring animals in the future."

There is no easy magic solution, he says. Local abattoirs will never achieve the same economies of scale as large processors, and producers understandably want the best return they can find, which may or may not be through their local abattoir. "What we are attempting is to build a client base that is willing to pay more for local food."

Traceability direct to the animal and the farm that produced it is the local abattoir's competitive advantage. A clear path from producer to buyer allows those on each end to build relationships and exchange a wide range of information. "That's important to a lot of the local clientele and they're willing to pay more for it," he says.

Remaining optimistic while trudging through all the ups and downs on the path to this goal may well be the Rainy River board's greatest challenge.

Late in 2013, the board was able, for the first time, to make a significant payment on its property tax bill. Finally, Darby says, they could see the light at the end of the tunnel.

Days later, there arrived a retroactive hydro bill for $28,000. There had been no warning such a large sum was owed, and now the board must fundraise to deal with the debt. BF

One producer's struggle to find slaughter facilities
When Sebringville farmer Luann Erb sells cuts of lamb at the Stratford Farmers Market on Saturday mornings, she knows customers will take their time to choose their package. People who want local food don't think about their wallets so much when they buy. "They buy with their eyes," she says.

That's why Erb decided clear plastic vacuum packaging was a must when she and her husband Tim started to raise and market sheep in 2009. (They also raise chickens, ducks and pastured pigs.) It was the only way to compete with the butchers at the market who could display fresh cuts of meat in coolers.

She never dreamed finding an abattoir that could process the meat to their specifications would be among their greatest challenges.

She quickly ruled out Perth County's single processor, Walnut Hill Farm Inc. in Gads Hill. Owner John Koch used to provide slaughter services but now focuses on secondary processing, and the slaughterhouse he uses is an hour's drive away from the Erbs' farm. Such distance defeats the purpose of locally produced food by adding transport miles, says Erb, not to mention the stress it can place on animals.

Nearby abattoirs in Oxford County didn't offer vacuum packing or labelling. She found one in Huron County that did, but the arrangement collapsed a year later when the butcher decided to end slaughter and custom processing services.

Erb is not alone in her frustration with finding processors. A 2012 Perth County study on the business retention and expansion in agriculture and food revealed a lot of concern throughout the food production chain about abattoir capacity. So, in 2013, the county invited University of Guelph students to produce a study on the challenges and opportunities facing the county's livestock processing sector.

"We wanted to assess how critical the issue was and see what we need to be doing," explains Kristin Sainsbury, the county's economic development co-ordinator.

The study found that there were adequate slaughter services not too far from the county's borders. Still, "we're on that borderline," Sainsbury says. "If we have any more (area abattoirs) close down, we could be in a really bad situation."

Sainsbury says the study's results convinced county representatives "that the best thing to do was to make sure the abattoirs we have stay viable in the province rather than worrying about opening more, and trying to help them figure out how to be more sustainable and grow their businesses. If we still find there's a shortfall in different regions, then the next step is looking at how do we fill that gap?"

So she is now focusing on helping the county's lone processor identify grant opportunities, make connections and find other opportunities.

For Erb, though, proximity is only part of the story. She also needs someone who will work with her to do the product the way she wants so she can build and retain her customer base. She thinks she's found that in a butcher and abattoir in Dashwood, a 40-minute drive away. The owner is young, open to new ideas and mostly does a great job, she says. But there's "quite a turnover of people within their plant," she says, and with new staff, mix-ups happen.

Having participated in several local and provincial farm groups that have been looking at the issue, Erb understands how hard it is to attract people to work in abattoirs. She hopes her butcher sticks around. BF

Quebec's mobile abattoir experiment
Mobile abattoirs have often been discussed as a potential solution to addressing Ontario's dwindling abattoir capacity, particularly in more remote rural areas. Currently, the province does not permit the abattoirs to process meat that is intended for sale, although some are serving people who eat what they produce, says Hillary Barter, Sustain Ontario's lead on meat and abattoirs. The provincial alliance of different interest groups has co-ordinated a working group to discuss meat and abattoir issues.

In an April 2013 article on the organization's website, Barter analyzes an effort to launch a mobile abattoir in Quebec.

The abattoir, which served the region of Abitibi-Temiscamingue, ran from 2005 to 2008 and slaughtered species ranging from deer, goats and pigs to sheep, ostrich and emu. It only provided "kill and chill" service.

While the abattoir had the advantage of being able to go to the animals rather than having to come to them, it did not operate at capacity, she writes, and the number of producers who used the service, initially 20 to 25, dwindled. She attributes the low volume to "location-related politics that arose because farmers in some parts of the larger region felt improperly served, and the fact that farmers had trouble selling enough of the meat that they produced." The cost of slaughter services, she says, was comparable to other outlets once transport to them was factored in.

Other reasons that may have played a role in the project's demise included:

• The lack of a feasibility study to determine demand for locally produced meats
• Lack of provincial and federal government buy-in
• Inflexible regulations, such as for water testing

Barter concludes that, as is the case with a stationary community abattoir, the Quebec mobile abattoir experience demonstrates the importance of fostering new markets along with a new processing initiative even though it might be a challenge for farmers. It also indicates there's a need to establish a critical mass of farmers to undertake such a venture and "clearly, it's also really important to plan to address as many technical challenges beforehand as possible." BF

Prices for slaughter service lag behind
Technical amendments in some provincial meat processing regulations that came into effect in January might help ease the price tag of small abattoir development, says Cory Van Groningen, president of the Ontario Independent Meat Packers Association.

But the changes are not likely to make much of a difference for existing ones, such as his family's operation near Simcoe, he says.

Susan Murray, a spokesperson for the Ontario Ministry of Agriculture and Food (OMAF), says in an email the changes "support food safety for the public, clarify that OMAF's role is the inspection of slaughter plants and freestanding meat plants that conduct higher-risk processing or significant product distribution, and make it easier for businesses to comply with the regulation."

There are also provisions to improve standards for animal handling and care, she adds.  

Van Groningen says one of the questions his organization is planning to explore is the true cost of harvesting animals in the province. "So there are some regulatory implications."

He adds that "this is an industry that doesn't seem to move the price of services in proportion to other similarly placed services like equipment repair for farmers." He says he's heard of areas where prices are the same as they were 30 years ago.

"What are the economics in place when everything else is more expensive these days, why would slaughter service not have increased the same proportion? I think that plays a part." BF