Processing Challenges

Robert Fraser, Sales and Service, Genesus Inc.

Ever since Quality Meat Packers (second-largest pork packer in Ontario at the time) went down in 2014 sideswiping producers for a week’s worth of pigs on the way out, the Ontario pork industry has got by on perhaps more good luck than good management. The loss of Quality removed approximately 30K hooks of processing capacity from Ontario. At the time Conestoga Meats (producer-owned packing plant in Ontario) was expanding from approximately 15K per week to 30K and ultimately 35K per week. The plan had been for that to be an evolution over a year and a half. Necessity being the mother of invention that all got fast-forwarded taking up some of the slack. Then Olymel (Canada’s largest pork packer) with five various plants in Quebec, entered the Ontario market securing some 25K hogs per week on contract.

However, seems in this time Olymel has had a litany of challenges as to why they can’t get your hogs dead or at least Ontario hogs. Between labour strikes, cooler problems, Covid, and on and on seems the Ontario flow has been almost continually challenged. This has resulted in long periods where the Olymel supply has been shipped to Western Canada, the Midwest, or Sofina (Ontario packer). Although the suggestion has been through all this, Olymel has kept producers “whole” as to their contract. But one would have to wonder about the viability of in essence becoming the procurement arm of your competitors.

The latest chapter in this saga has been a four-month-old strike at one of their plants in Quebec resulting in a backlog of some 160K plus hogs which will be a very long time clearing. The strike has just been resolved. Details here:

Finally! Olymel workers ratify agreement
By Lisa M. Keefe on 9/1/2021

The members of the Olymel workers’ union in Valle´e-Jonction, Quebec, Tuesday (August 31) ratified the labor agreement reached over the weekend, ending the months-long strike that snarled pork supply lines in Canada.
The new six-year collective agreement will expire in March 2027. Olymel workers at the plant began their strike April 28.
The company hopes to resume slaughtering as early as Friday, September 3.
The Valle´e-Jonction plant should gradually regain its weekly slaughter capacity of about 35,000 hogs, a significant portion of which is shipped to the Japanese market. (source)

Although it’s wonderful to have this finally resolved seems there remain some serious flaws to Canada’s (Ontario) processing industry. Questionable whether you can have a viable long-term pork industry without a strong vibrant processing industry.

Last commentary, eight weeks ago, Bob Hunsberger, Wallenstein Feeds, Hog Economics Summary Sheet showed profitability per pig with average production at $67.41. Now it has dropped twenty-three dollars to $44.41. However, the next twelve-month projection has held steady from a profit of $31.68 to $31.20. Remaining very encouraging.

Reviewing this year’s commentaries-

  • January 25, 2021 – profitability per pig with average production at (-$39.27)
  • March 22, 2021 – profitability per pig with average production at $26.34
  • May 17, 2021 – profitability per pig with average production at $51.03
  • July 12, 2021 – profitability per pig with average production at $67.41

A very good year by any measure.

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This post was written by Genesus