There are no more premiums at the trough.
The Alberta pork war is over after four weeks of high returns for prairie hog farmers.
Along with the announcement that Saskatchewan Wheat Pool was buying 35 percent of Fletcher’s Fine Foods in Red Deer, Alta. came the news Feb. 10 that the company would no longer pay premiums that had grown to $24 per delivered hog.
The next day, Maple Leaf Foods, which owns Gainers packing plant in Edmonton, announced it would follow suit.
Greg Whalley, vice-president of communications for Fletcher’s, said his company’s new association with Saskatchewan Wheat Pool gave it the ability to back away from the premium battle.
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“Our relationship with Saskatchewan Pool is sufficiently strong that we can count on the hogs we need for our expanded plant,” he said in an interview.
The pool’s livestock arm, Heartland Livestock, is planning two joint venture hog production units in Saskatchewan that are expected to turn out about 100,000 market pigs a year.
Ward Toma, spokesperson for the Alberta Pork Producers Development Corp., said the market has returned to pre-premium levels.
“The price has come off the last couple of weeks. That’s a North American trend.
U.S. doesn’t participate
“The packers, particularly U.S. packers, aren’t willing to bid up the price,” he said, noting packers are complaining about tight margins.
Neither Fletcher’s nor Maple Leaf say they started the premium contest that cost them each more than $100,000 a day at its peak.
“You have to ask the person who threw the premium down in the first place. It wasn’t us,” said Whalley.
“We were reacting to a situation that threatened to deprive us of any hogs.”
Linda Smith, of Maple Leaf Foods, laughed at the suggestion.
“Look at releases that came from Fletcher’s at the time.”
Take aggressive measures
She referred to a Jan. 14 release that said Fletcher’s and the Alberta Pork Producers Development Corp. had signed an agreement where the pork corporation would “utilize its best efforts” to supply Fletcher’s with its daily hog needs.
The agreement was something new for the pork corporation, which had lost its monopoly over provincial hog marketing in December.
Some Alberta producers have complained that the pork corporation and Fletcher’s are too close.
Until 1994, the corporation owned all of Fletcher’s. In that year, it sold half the company to Vencap Inc., an Edmonton investment company owned by Onex Corp. The rest of the shares were distributed to eligible producers.
Toma denied a special relationship between the pork corporation and Fletcher’s before or after the change in ownership.
“It was purely from a business standpoint. We had hogs to sell and they bought them. It was no different from our relationship with Maple Leaf or Gainers,” he said.
Both packers say they plan to go ahead with their expansion plans.
Last fall, Fletcher’s raised more than $15 million on a public share offering before being listed on the Toronto Stock Exchange. The money will help fund an expansion of the Red Deer plant costing about $20 million allowing it process 8,000 hogs in one shift.
Maple Leaf, which also owns Burns in Winnipeg, has said it wants to build a world scale plant somewhere on the Prairies.
