The Alberta government has rejected a plan by hog producers to use a government loan to buy half the Olymel pork packing plant in Red Deer.
Jim Smith, chair of Western Hog Exchange, said the plan would have allowed producers to team up with the Quebec-based pork processor Olymel and create value-added products with a made-in-Alberta brand.
The Alberta government turned down the plan, said Smith, who is hopeful it will change its mind.
“We still think the government can play a role. If they don’t, it could be the death wish for the hog industry in Alberta,” said Smith, who wouldn’t say how much money they wanted to borrow from the provincial government.
Read Also
Canola oil transloading facility opens
DP World just opened its new canola oil transload facility at the Port of Vancouver. It can ship one million tonnes of the commodity per year.
“We asked them for a repayable loan,” said Smith, who is still approaching MLAs with the idea.
“We’re actively pursuing the people we think didn’t know enough about the project when they made the decision,” he said.
Mack Rennie, general manager of the Western Hog Exchange, said the hog group has worked on the idea for a year. It wanted to show how a farmer share in the only remaining provincial pork processing plant would allow Alberta producers to add value to their hogs.
“Instead of selling pigs, we wanted to sell pork,” said Rennie.
It was clear to the Western Hog Exchange’s board of directors that if Alberta hog producers were to survive they needed to do more than sell hogs to Western Canada’s two remaining packing plants: Olymel in Red Deer and Maple Leaf in Brandon.
“We’ve got to do it different than we do it now: us produce, they sell.”
Rennie said the board approached Olymel with the proposal last July. Officials with Olymel’s head office in Quebec were interested enough to open up their books to the Western Hog Exchange group.
“They’re a good company to work with,” said Rennie.
“We trusted them.”
Throughout the year-long process of putting the plan together, the hog producers kept in contact with the provincial agriculture department and then agriculture minister Doug Horner about the plan.
Then the provincial government changed leaders and a new agriculture minister was appointed. The hog exchange presented its idea to the minister George Groeneveld in March.
“We said to him very clearly, ‘we don’t want cash. We want to pay you back,’ ” said Rennie.
“We thought it was a good idea. This government needs a good news story.”
Smith said they saw the plan as a way for the money-losing packing plant and money-losing hog producers to change the way they do business so both make money. The agriculture department has long touted value-added as the way to help producers instead of selling raw product that is processed in another country.
“We think it’s a way to move forward. It’s not a magic cure, but I think in the future it would serve everyone well. There’s certain things can be done to benefit both parties,” said Smith.
Tony Moulds, with Rocky Mountain Pork, where an interim receiver has been appointed to sort out its financial difficulties, doesn’t think owning the packing plant will solve the hog industry’s problems.
With the high Canadian dollar, a different way of buying hogs is needed than basing it off American hog prices.
“To buy the plant for the third time, I don’t think that’s the answer,” said Moulds of the former producer-owned plant.
Groeneveld said when the plan was floated past government officials in the Treasury Board they winced at the idea of giving an unsecured loan for half interest in a packing plant.
There was also a concern that any money from Alberta would end up in the hands of the Quebec-based co-operative, which owns the plant.
“(The producers) weren’t going to get control of the plant with their plans. It was no guarantees on the other end as well where the money would go. They still might choose to shut the plant down here or whatever the case may be. It just wasn’t a good plan,” the minister said.
Groeneveld said a decision by Olymel to reduce hog prices by $12 a hog after the province rejected the loan guarantee may have shown Olymel wasn’t committed to the idea of partial producer ownership.
“I’m a little bit upset with Olymel. Did they tip their true hand a little bit in this whole game by doing this?”
Groeneveld said a rejection of the plan isn’t a rejection of the industry, but a sign that a better plan needs to be developed.
“We just have to come up with the proper plan to make this long term. We’ve learned even from the BSE crisis. We put a lot of money out there. That was short-term fix; that wasn’t long-term fix.”
