News

Donald’s Fine Foods, based in Richmond, B.C., is looking at developing the defunct XL foods beef plant in Moose Jaw, into a sow processing facility.

The company is conducting a feasibility study and gauging overall support from producers, the public and government for creating a “technologically advanced sow processing facility serving Western Canadian hog producers,” according to a release.

Over 80 per cent of cull sows are exported to the U.S. for processing, notes the company. Western Canadian pork producers could benefit from the plant because it would reduce transport costs, and producers could deliver directly to the plant. Increased biosecurity would also be an advantage, and the new plant would alleviate some of the risk of border closures.

“We want to create more opportunities for pork producers and support the forecasted need for domestic sow processing capacity,” states Allan Leung, CEO of Donald’s Fine Foods.

Donald’s Fine Foods operates four plants across Canada and employs 800 people. The Thunder Creek Pork processing plant, also owned by Donald’s Fine Foods in Moose Jaw, Sask, employs 250 people. The new sow processing facility is intended to complement the existing market hog facility and is anticipated to employ 100 people.

Saskatchewan-based seeding equipment manufacturer Morris Industries, which has been in creditor protection since early January, has received a purchase offer from another Saskatchewan-based manufacturer.

Superior Farm Solutions Limited, which operates the Rite Way field equipment business, has submitted a non-binding letter of intent for a proposed acquisition, according to a document published this week by court-appointed monitor Alvarez and Marsal Canada.

The report for the Saskatchewan Court of Queen’s Bench says the letter of intent was executed on May 22, with support from Morris’ largest secured creditor, BMO.

Terms of the offer are still confidential.

Alvarez and Marsal is asking the court to issue a fourth extension to the stay of proceedings against Morris, extending the creditor protection that is set to expire May 29 to July 3. The court-appointed monitor says the extension would give the company time to close the proposed transaction and that it would enhance Morris’ prospects of “effecting a viable restructuring.”

Headquartered in Regina with manufacturing based in Imperial, Sask., Rite Way builds and sells a variety of equipment, including rock pickers, land rollers, heavy harrows, rotary harrows, and crimper rollers.

Alberta’s agriculture minister is sharing new information regarding the cattle set-aside program that’s being rolled out to address the backlog of cattle as processing capacity has been limited by COVID-19.

A couple of weeks ago, the Alberta government announced they would be providing provincial funding in addition to the federal AgriRecovery funds for the set-aside program that was being requested by the Canadian Cattlemen’s Association (CCA). Minister of Agriculture and Forestry, Devin Dreeshen, shared some more details on Thursday (May 28.)

“What we’re planning on doing with our fed cattle set aside is to do an initial payment of about $2 per head per day on eligible fed cattle. Ultimately what we wanted to do, and what we are going to do, is set up a bid process,” Dreeshen explains, in the interview below. “Every week there will be a 48 hour bid that will dictate which cattle get processed and when,” adding that right now there are over 100,000 head that are backlogged in the system currently.

The timeline on the 48-hour bid program is taking longer than the government had hoped, but this is why they have decided to do a two-step approach to the set-aside program. It is expected that Saskatchewan will run a similar program with its funding.

The $2 per head per day fed cattle is the first step of the program, as urgency is required right now. The Alberta government hopes to move into more of a bid system as time goes on. As of now, the program will be set up for the first nine weeks, and an assessment will follow. However, Dreeshen note that the funding the Alberta government has could extend for up to 30 weeks.

In order to qualify for the funding, Dreeshen says there will be weigh-in and weigh-out qualifications. As of now, the qualifications are not completely clear, as details from the federal government will be rolled out.

“After the original fed cattle set-aside program that was set up during BSE, that was one of the lessons learned that we have set up in this program. In addition to that, during BSE, we had no capacity to ship down to the U.S.,” says Dreeshen. “Obviously their meat processors are having issues as well, but some of that capacity is coming back on stream right now.”

If there is a need come fall and winter and COVID-19 comes back for a strong second wave, Dreeshen adds there will be opportunity for a set-aside program that isn’t just for fed cattle. They are also looking at creating a committee for the program, which would allow for industry involvement and representation from Alberta Beef Producers, and the Canadian Cattlemen’s Association in the process.

Check out the full conversation between Minister Dreeshen and RealAgriculture’s Shaun Haney, below:

Statistics Canada released its 2019 farm income and debt report this week, and it showed that realized net income of Canadian agricultural producers rose for the first time in three years.

Net income was up 10.4 per cent to $4.9 billion in 2019, but as J.P. Gervais, chief economist of Farm Credit Canada (FCC) points out, this was primarily due to the inclusion of cannabis receipts for the first time.

Farm cash receipts, excluding cannabis, increased 2.9 per cent, similar to the average annual gain over the previous five years of 2.4 per cent. Canadian crop revenues, excluding cannabis, declined 1.1 per cent in 2019 while livestock receipts increased 5.1 per cent to $26.3 billion.

Despite the rising income, collective nationwide farm debt rose by 8.7 per cent, as Statistics Canada reported it at $114.8 billion. Saskatchewan’s farm debt was 9.1 per cent higher than the national average. Although we don’t have statistics on the source of that growth, Gervais says we know that there are some pressures on that income with the difficult years of drought (and floods) Saskatchewan has faced.

2019 was the 26th straight year of farm debt rising — a trend that’s likely going to continue in 2020 due to COVID-19 and expanded lending programs to assist producers through the pandemic’s turbulence.

Gervais says although Statistics Canada and others use the term realized net income, he prefers to use cash income, which is gross revenues minus cash expenses. From a financial point of view, this allows us to look at what we can take out of the farm, and what you can use to invest or pay down debt. “In my mind, it gives us a picture to look at, of what we can use,” he explains.

Notably, Saskatchewan faced the largest decline in realized net income, with a 15.6 per cent reduction, at $311 million, while Manitoba declined $179 million. Gervais says this is the result of a bit of down pressure from crop receipts and less cannabis sales. Gross income was flat, and operating expenses continue to go up, with a notable increase of 3 per cent in operational expenses.

The majority of provinces saw increases in realized net income in 2019, with Alberta, Quebec, British Columbia, New Brunswick, and Prince Edward Island being on the plus side.

As for the first quarter of 2020, overall cash receipts were up 5.5 per cent, but as Gervais notes, we’re likely to see the impact of COVID-19 rear its head in the second quarter in some of the major commodities. According to Statistics Canada:

Lower oilseed receipts moderated the rise in crop receipts. Revenue of canola producers decreased for the second consecutive year, down 7.4 per cent following a 6.5 per cent decline in 2018. Prices fell 9.8 per cent in 2019 in the wake of Chinese import restrictions on Canadian canola seed that began in March 2019. Nevertheless, marketings were up 2.7 per cent as domestic crush reached record highs and lower prices boosted exports to other countries.