Loss of Packing Capacity Creating Demand Uncertainty for Ontario Hogs

photo courtesy of ebeyfarm.blogspot.com

The closure of two packing plants in Ontario last year has forced producers to look for hook space at processors outside the province.

The uncertainty in demand is hurting confidence in the industry, suggests Guelph-based livestock and meat market analyst Kevin Grier.

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Kevin Grier

At the start of 2014, Ontario’s federally-inspected slaughter capacity stood at around 95,000 head per week. Today, it’s closer to 71 or 72,000 head following the closure of Quality Meats (30,000 head) and subsidiary Great Lakes Specialty Meats (6,500 head) last spring. The loss of packing capacity was partially offset by a 13,000 head expansion at Conestoga Meats.

“It’s a big change and a change that is not positive with regard to Ontario hog production,” says Grier in the interview above. “We’ve gone from a very robust market where producers had a lot of leverage to a situation where producers have little or no leverage in Ontario.”

As a result, more Ontario pigs are being shipped east to Quebec, south to the U.S. and as far west as Brandon, Manitoba.

The most noticeable change has been in the flow of Ontario pigs into Quebec, where the hog supply/demand scenario is opposite to Ontario’s. In his latest market report, Grier notes the number of pigs moving east each week has grown from around 10,000 head to 25,000 or more, as Olymel and other packers in Quebec look to supply under-utilized slaughter capacity.

While Ontario producers are benefiting from excess slaughter capacity elsewhere, he says they’re also finding themselves at the mercy of processors located outside the province.

“Anytime where there’s a holiday week or production challenges at all, in the past, the packers could always make up for it,” he says. “That’s not the case anymore. We have issues to the point where market hogs are finding their way into Brandon, Manitoba now. You’re talking about a significant distance for market hogs. It’s symptomatic of a situation that’s not particularly healthy from a marketing perspective.”

That demand for Ontario pigs in Quebec could also soften, as Olymel is currently partnering with producers to build five collectively-owned sow barns near the Ontario border in northern Quebec that will produce 5,000-5,200 pigs per week.

Grier acknowledges there are many good reasons to produce pigs in Ontario, including market access and land base, but he stresses hook space is fundamental for sustaining the industry.

“It’s great that they’re able to get those hogs moved, but it’s not something that producers feel confident about and not something that builds confidence in being able to invest for the future.”

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Kelvin Heppner

Kelvin Heppner is a field editor for Real Agriculture based near Altona, Manitoba. Prior to joining Real Ag he spent more than 10 years working in radio. He farms with his father near Rosenfeld, MB and is on Twitter at @realag_kelvin

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2 Comments

Philip Shaw

What is the solution? It would seem we need more slaughtering capacity or less hogs produced. I’d prefer the first option. Anyway, it will also affect of feed grains between Quebec and Ontario. Excellent synopsis, I certainly dunno the way forward.

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Lois

A lot of it has to do with the labour shortage in meat plants…which is exacerbated by current temporary foreign workers rules. See the March issue of the Ontario Hog Farmer…

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