BANFF, Alta. – The Canadian pork industry is experiencing the same rush as the beef industry did a decade ago when smaller packers closed or merged with larger, more technologically efficient ones.
More changes are likely if there is further expansion in Canadian hog production, said economist Jill Hobbs of the George Morris Centre.
“You could have one of the big U.S. plants moving in here or more consolidation of the plants here,” she said in an interview.
Using figures from a recent study, Hobbs told a pork seminar that hog production has increased in Canada from 15 million hogs per year in 1987 to 18.5 million in 1997. Western Canada saw the greatest increase at 44 percent. Quebec had a 25 percent increase while Ontario and Maritime production dropped.
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While hog numbers increased, the packing sector was undergoing consolidation and plant renewal. Maple Leaf bought Burns and Gainers and expanded. Fletchers expanded its Alberta plant and an expanded Schneiders was bought by Smithfield.
Canadian packers face challenges if they want to remain competitive.
They are smaller and less technologically advanced than American plants, which often have two or three shifts.
Multiple shifts spead out costs and reduce expenses. Manufacturing costs for a plant processing 20,000 hogs a week in two shifts are $6.14 per 100 kilograms of pork, while a plant doing 45,000 a week has costs of $3.57 per ckg. Larger plants also have faster line speeds.
Although lower wages have been negotiated, the Canadian plants suffer chronic labor shortages and high worker turnover, said Hobbs.
Plants walk a fine line when watching costs.
“You can become more cost competitive but if you do it at the expense of quality, then you’re giving up a lot,” she said.
Losing trained workers may sacrifice quality.
The hog packing industry in Denmark pays higher than average wages arguing a loyal staff produces a more valuable quality product.
