All three of the major prairie hog slaughter plants are now owned by
big processing companies.
While some mourn the loss of western control of Mitchell’s Gourmet
Foods in Saskatoon and the Fletcher’s Fine Foods/Premium Brands plant
in Red Deer, hog industry analysts say farmers have probably gained on
the deals.
“We have a tendency to be concerned about big companies and the
dwindling number (of companies controlling the North American hog
slaughter industry), but when you look at each of these situations as a
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microcosm, it’s been good,” said George Morris Centre meat market
analyst Kevin Grier.
In 2001 the Quebec co-operative called Olymel bought the Fletcher’s
packing plant owned by Premium Brands.
In 1999 Schneider Foods, owned by U.S. based multinational Smithfield
Foods, bought 32 percent of Mitchell’s. It has increased its share
over the years and in recent weeks bought the remaining portion held by
the Mitchell family.
Those plants, along with Maple Leaf Foods’ Brandon facility, now
dominate the prairie industry.
Grier said he hasn’t heard Alberta farmers complaining about a Quebec
giant taking control of the Red Deer plant from Premium Foods, a
Vancouver-based company.
“I think everybody would say it’s been good,” said Grier.
Manitoba Agriculture livestock markets analyst Janet Honey agreed.
“There’s definitely more competition for hogs in Alberta,” said Honey.
The Brandon Maple Leaf plant once drew many hogs from Alberta and
Saskatchewan, Honey said, but that has slowed since Olymel bought the
Red Deer plant.
Grier said his data shows that Olymel is offering better prices than
its predecessor.
“The Alberta price spread is far stronger than it was before, which
tells me that Olymel is paying higher prices than would have been the
case without them there,” said Grier.
If Smithfield increases its slaughter in Saskatoon, prices would become
even stronger on the Prairies as the three plants fight for supply.
Grier said Olymel’s more aggressive pricing gives hog farmers hope.
“They are committed to the business and committed to having a hog
slaughter business in Alberta, which I don’t think Fletcher’s was in
the later years,” said Grier.
Honey said Alberta farmers probably find Olymel a comfortable company
to work with.
“They are far more efficient, they are more producer-oriented and they
have a good track record,” said Honey. “Many producers complained about
Fletcher’s.”
As for Mitchell’s, Grier said Smithfield’s willingness to buy LuAn
Mitchell’s remaining minority stake shows the company is committed to
the hog business in Saskatchewan.
“To me it’s good news that a large company is making a commitment to
the Saskatchewan hog industry,” said Grier.
“It’s fortunate Smithfield is there.”
SPI Marketing Group general manager Don Hrapchak said marketers don’t
like to see fewer packers, since that could mean less competition and
lower pig prices.
But with the change that has swept the prairie hog industry since the
1990s, it is impossible to gauge whether consolidation of ownership has
meant weaker prices for farmers.
“How do you quantify it?” said Hrapchak, whose organization is still a
minority shareholder in the Saskatoon plant.
“No one knows if things are better or worse.”
He said the Smithfield purchase is probably more a factor of Mitchell’s
decision to get remarried and start a new life than it is a sign of any
industry dynamic. He said the financial situation of the Saskatoon
plant, which in the mid-1990s seemed in imminent danger of collapse, is
much better today.
The takeover of prairie slaughter by processing giants may bring some
stability to an industry in flux since the mid-1990s, when all three
prairie governments broke their provincial hog marketing monopolies,
said Grier.
Hrapchak said the changing of the guard has been profound, with Maple
Leaf building its huge plant in Brandon, the other two major packers
expanding and changing ownership, and the smaller packers switching
owners and becoming less local.
“There has been a tremendous consolidation of the industry in the last
10, 15, 20 years,” said Hrapchak.
