Fletcher’s Fine Foods has bought 40 percent of the shares of a northern Alberta hog operation in an attempt to increase the province’s pig population.
George Paleologou, vice-president and chief financial officer of Fletcher’s, said with its initial purchase of shares, Peace Pork can now go to the bank to double its hog operation.
“Peace Pork would not be able to expand if not for us as a partner,” he said.
Under the terms of the agreement, Fletcher’s will buy up to 40 percent of the shares in Peace Pork and the two companies will enter an exclusive hog supply arrangement.
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“We give them a supply contract with bottoms in it to cover some costs and provide some equity, which makes banking a lot more feasible,” said Paleologou.
Peace Pork produces about 110,000 hogs a year. The main sow barn is in Farmington, B.C., with grower and finisher barns in Alberta.
Win-win arrangement
Paleologou said Fletcher’s is looking at similar arrangements with other large hog producers in Alberta. In exchange for providing capital, some price protection and shareholder liquidity, the hog processing plant gets a guaranteed supply of hogs.
“In our position we need to get more hogs as soon as possible.”
The Red Deer slaughter and processing plant expanded two years ago in anticipation of more hogs produced on the Prairies. With low prices and Maple Leaf’s new facility in Brandon, Fletcher’s can’t get enough hogs.
About 8,000 hogs a day are processed at Red Deer. The company’s goal is to process 16,000 hogs a day.
Paleologou said Fletcher’s believes the number of hogs produced on the Prairies will eventually increase, but it wants the numbers to grow more quickly.
“We’re not seeing the expansion in the hog production numbers we had anticipated. We expected Red Deer to substantially process more hogs.
“It’s the only way to get increased hog production out of Alberta in a short period of time.”
Calls to Peace Pork were not returned.
