Yes there's challenges, but opportunities do exist say food processors

Friday, November 7, 2008

Photo: Brian Sikes is Cargill Meats Canada Business Unit Leader.

by BETTER FARMING STAFF

Speaking at a London conference on Thursday, representatives of the province’s agri-food sector expressed hope for their industry even while they admitted to huge hurdles.

One of the greatest of these is the economic climate, said Brian Sikes, a spokesman for Cargill Meats Canada.

Sikes said his company anticipates one to two years of tough economic times ahead. Although Cargill is prepared to make “base” capital investments on food safety and safe working conditions, new projects are on hold.

“Hunker down” and weather the global economic storm is the company’s attitude right now, he said. “It really is an opportunity for companies that are strong and that aren’t highly leveraged … we expect to grow but we’re going to make sure we do it at the right time and not jump at the first thing that comes along.”

Brad Hogan, a spokesman for Labatt Breweries of Canada, said in 2008 his company budgeted for a $50 million increase in commodity costs but the increase amounted to $70 million. “This is a huge, huge gap for us.”

Raising beer prices was not an option, so they coped by: changing how they bought commodities such as aluminum, natural gas, rice and corn; selling byproducts they don’t use; introducing different packaging materials; changing some product recipes; conserving materials; offering staff incentives to find savings; and working with suppliers to reduce costs.

“We challenged suppliers like we never challenged suppliers before,” he said, noting the company even tried to strike a deal with the Canadian Wheat Board for cheaper barley.

Hogan said Labatt is preparing for 2009 by asking suppliers to sell commodities at rates comparable to those in place before market prices rose in 2007. In future Labatt plans closer relationships with its feedstock suppliers, particularly those supplying barley “to ensure we’re getting the crops and varieties we need.” 

“I think we may have been a little hands-off maybe in the past few years and I think we’re going to get a little closer to that business and make sure we see it right from the crop, right through the maltster, right through to our processing.”

Several of those speaking observed that finding skilled staff was problematic. Tito Guglieimi, of Mallot Creek Associates blamed the situation on an aging population and the failure to promote the industry’s needs to job seekers.

Middlesex County farmer Steve Twynstra was among several who identified over-regulation as a major hurdle. It complicates primary producer growth and makes it difficult to compete in world markets, Twynstra said. “We can grow this business in Ontario for primary producers, it’s just a matter of getting all the ducks in a row.”

George Borovilos, a business development advisor with the Ontario Ministry of Agriculture, Food and Rural Affairs, said the provincial government has established a committee to modernize government regulations. BF