It goes against conventional wisdom for a hog processor to want feed grain farmers, hog producers and slaughter house workers to make better profits.
But that’s exactly what Bill McLean, general manager of Schneider Corp.’s Winnipeg plant, wants to see in the industry.
For the hog industry to expand on the Prairies, McLean said all parts of the supply chain need to work more closely together – and make reasonable returns.
McLean made his remarks to the Manitoba Institute of Agrologists in a wide-ranging speech about the future of the hog industry.
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It’s clear that the future lies in export markets, he said.
Today, 40 percent of the pork produced in Canada is exported to more than 50 countries, making Canada one of the biggest pork exporters in the world.
The value of Manitoba production has been jumping sharply upward, rising from $78 million in 1996 to $154 million in 1997, and moving more than 20 percent higher each year since, said McLean.
“Japan is the heart and soul of the business. They pay the most money, the most profit, and that is the country that really pushes us for safety, quality.”
As the Canadian industry relies increasingly on export markets, it must tread carefully and hope for a strong world economy with a fair trading environment, he said. It must increase world demand by giving customers precisely what they want.
Players within the industry need to work as a team, not as competitors.
McLean said risk-sharing contracts between industry sectors will help ease price and supply volatility that cyclically rocks the business, most notably in 1998.
Schneider is developing a contract based on hog producers’ costs of production, said McLean.
He believes retail customers will buy into effective, long-term contracts, increasing overall demand.
McLean acknowledged public interest and speculation about Schneider’s plans to expand its Winnipeg plant. He told agrologists the company wants to attack expansion “at a time in the not-too-distant future” when it can fill long slaughter house lines to capacity, and make profits.
“We believe it’s going to happen.”
The plant will be as large as Maple Leaf’s Brandon plant, which has capacity to kill 90,000 hogs per week, but so far has not run full double shifts.
To reach capacity for both Maple Leaf and the Schneider expansion, farmers have to stop exporting weanlings to American packers and produce four million more animals per year.
That won’t be easy, said McLean. Entrepreneurial farmers who have found markets in the United States have built strong relationships with their buyers.
“Once these relationships are established, it’s very, very difficult” to get the hogs back, said McLean, noting a recent price war between Schneider and Maple Leaf failed to stem the tide of exports.
Producers must also have the money to invest in barns for the expansion. But in the bloodbath of 1998, many producers lost equity, he said.
