CALGARY – An air of uncertainty has settled about the hog industry in the wake of Maple Leaf’s takeover of Burns Foods.
While hog industry leaders say predictions are premature, many believe processing plants will be consolidated, plants will be closed or jobs will be lost as eastern-based Maple Leaf Foods lays out its plans to become a profitable national processor.
“Burns and Maple Leaf have been good customers of ours and we have a good relationship with both of them,” said Jim Morriss of Saskatchewan Pork International, the province’s hog marketing agency.
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However, he speculates there may be some consolidation of the pork packing industry in the West and singled out the Gainers Inc. plant in Edmonton as a possible plant closure. It is an older pork plant purchased by Burns several years ago.
As well, Morriss expects Maple Leaf will examine brand names and could switch to a system where certain locations specialize in certain products.
Maple Leaf announced Sept. 16 it had bought the fresh pork and processed meat operations of Burns. The purchase price has not been disclosed. The deal is expected to give Toronto-based Maple Leaf about one-quarter of the Canadian prepared meats market. Maple Leaf will also gain ownership of four processing plants on the Prairies and a small beef slaughter plant in Lethbridge, Alta.
While it was a surprise to see Maple Leaf come west, Roger Charbonneau of the Alberta Pork Producers Development Corp. said the Canadian industry appears headed in the same direction as the American pork business where there are fewer packers, processors and widespread contracting with producers.
Maple Leaf could initiate a change in the way hogs are purchased. In its most recent annual report, the company said it is interested in buying directly from producers in Ontario.
Alberta is switching to an open market sales system this fall which enables packers to buy directly from producers. However producers will only participate if they are guaranteed this system won’t drive prices downward.
“If the packing industry wants to maintain a certain amount of production, there’ll have to be a profit for the producers also,” said Charbonneau, a hog producer at St. Paul, Alta. and chair of the pro-vince’s pork marketing agency.
Larry Sedgwick of Manitoba Pork Est., a hog marketing agency in that province, said they are prepared to do business with the new company.
“There’s room for ourselves and them to work in some kind of alliance,” said Sedgwick.
In Ontario, Maple Leaf moved into contractual buying through the Ontario Pork Producers Marketing Board with the launch of Signature Pork Aug. 27.
Maple Leaf Foods was taken over by the McCain Corporation, which along with the Ontario Teachers’ Pension Plan Board, purchased controlling interest in April 1995.
Maple Leaf carries its own brand name on prepared meats and poultry. It owns Country Style Doughnuts, Buns Master Bakery Systems and Shur-Gain Feeds, as well as food processing interests in the United States, Europe and Asia.
The most recent annual report said its prepared meats division was the weakest performer for the company. Earnings in that division were $15.5 million compared to 1994 earnings of $41.4 million. This is partly due to a delayed start up at a new bacon and wiener plant in Ontario and other manufacturing costs.
