by PATRICIA GROTENHUIS
A market analyst with the George Morris Centre is questioning expanding processing plants when current capacities are not being met.
“The fact is that the last thing this industry needs is added capacity,” Kevin Grier wrote in a document released this week entitled Government Help to the Food Industry. “Pork packers in Ontario and on the Prairies are struggling to keep their plants running at capacity,” he asserts.
Grier’s comments follow two recent federal announcements of conditional loans to hog processing plants through the slaughter improvement program. The department’s website says the program’s objective is “to enhance slaughter capacity in regions where it has been demonstrated that the lack of capacity is constraining sector growth.”
The Great Lakes Specialty Meats of Canada Inc. plant in Mitchell will receive $4.5 million towards expanding product lines and increasing capacity. Cambridge Meat Packers will receive $1.6 million for a water treatment plant, needed before the plant, shuttered in 2000, reopens.
Grier was unavailable for an interview. His written commentary recommends removing industry barriers, such as higher taxes and inspection fees and lack of access to current export markets, rather than increasing capacity and adding more specialty equipment.
Patrick O’Neil, sales team manager for Ontario Pork, says the combined capacity for Ontario hog processors is 95,000 hogs per week In the last four weeks, low supply has kept sales to between 75,000 and 80,000 hogs. According to an Ontario Pork sales report May 7, Ontario Pork sold 80,158 hogs this week, 3,370 fewer hogs than last week.
According to the Agriculture Canada website, the last round of applications for the Slaughter Improvement Program was due at the end of October. The week ending Oct 30 last year, Ontario Pork sold 105,000 slaughter hogs.
Last December, Wilma Jeffray, chair of Ontario Pork, said “their (Ontario processors) primary hog supply is starting to evaporate and that puts their business at risk as well.”
Mary Jane Quinn, spokesperson for the Communication and Consumer Marketing Department at Ontario Pork says there is concern “if plants expand in any way that producers may not expand to meet capacity.” However, “the fact that these facilities are going into niche markets and putting in special equipment is a good thing.” Ontario Pork is hopeful the improvements at the processing facilities will help strengthen the pork industry, she says.
Federal Agricultural Minister Gerry Ritz also seems optimistic.
“A more innovative way of running product through will lead to efficiencies and of course leads to hopefully a better price for materials right back to the farm gate,” says Ritz in a telephone interview on Tuesday.
Quality Meat Packers Limited bought the Great Lakes plant in September 2009. Jim Gracie, Quality’s vice president of marketing and business development, says the plant will increase value-added production and in the future, increase slaughter capacity from the current 5,000 hogs weekly.
Changes will include increasing refrigeration capacity, recovery of byproducts and boning capacity. The plant sells to both domestic and export markets.
Albertino Domingues, owner of A.C.D. Wholesale Meats, has renovated the Cambridge plant since buying it in 2005. The last improvement needed is a water treatment plant, scheduled for completion in September. The plant can process 2,000 hogs per day, and will sell products in domestic and export markets.
Gracie and Domingues both say the plants will purchase hogs locally. BF
Comments
Politicans love to cut ribbons, and will throw all normal business sense to the wind, given the chance to be photographed handing out money.
Grier is right - building plants and hoping the hogs will come, is economic lunacy, but politicians are so desperate for good news on the agricultural front, that they will almost leap at any opportunity that looks like good news
production and then they could be more efficient,,,oh I forgot ,they just wanted more pigs cheaper...looking back at the last 10 - 15 yrs. and some of those proposals like MLP had that if you build a contract finishing barn and don't take any wages or cash out for 10 yrs. you will have your barn debt free ,ready too make some serious cash...now you have a 10yr. old barn needing upgrading,no contracts and a huge tax bill...wish that be it MLP ,Grand Valley,Master Feeds,Fritz Concrete, ect that went into contracting-competition with us that we had taken a policy stand that if you are going to be my competition I will not increase your balance sheet by buying feed,ect. from you...best luck too all that have survived so far...we may need that packing -processing capacity when one of the bigger players calls it quits in Ontario--regards-k g
We need to keep up our secondary leg in the infrastucture.
Not that long ago we were short of hookspace.
Not that long ago one of the major processors treatened to close the doors if they did not get things done their way.
Take a look at the location where our second largest processor is operating.
Most likely not for an other twentyfive years
The next six to nine months the hog numbers will continue to drop. But than there be a turn around.
It takes upto nine months or more to increase production, it takes a lot longer to build hookspaces.
So get going...............
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