It’s a devastating punch for Saskatchewan, but Maple Leaf Foods’ restructuring may be good news for Manitoba hog farmers, some say.
Many of the meat king’s future plans are unclear, however, and it will be months before all the implications are known.
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_____ Correction _____
This story originally stated, mistakenly, that Maple Leaf Foods plans to close most of its 14 feed mills in Canada. Maple Leaf Foods plans to sell most of its 14 feed mills in Canada. Read Also
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“For Manitoba I think this announcement is fairly positive today,” said Manitoba Pork Council chair Karl Kynoch.
He spoke after Maple Leaf Foods announced that it was shelving its plans for a new Saskatoon slaughter plant, continuing with its shutdown for the present Saskatoon slaughter plant, reducing its hog barn network and refining its “pork value chain.”
The company also plans to sell most of its 14 feed mills in Canada.
“Would you rather have them shutting the business down entirely, or restructure and concentrate on where they’re making money and focus on the long term?”
But Kynoch said his optimism was based on a number of assumptions, including that Brandon’s slaughter plant will be expanded, that Maple Leaf Foods will expand pork processing, that Olymel’s plans for a Winnipeg plant will go ahead, that Maple Leaf will not damage hog production by its barn ownership changes and that it will continue to buy hogs from independent producers.
Maple Leaf Foods said last week that it was going to expand its meat processing and focus on the best parts of its operations. But there is no guarantee in the announcement that the Brandon plant will begin a second shift, that the former Schneider plant in Winnipeg will keep operating or that the company will aggressively buy pigs from former partners.
One competitor with Maple Leaf’s present Elite Swine Inc. hog barn network said a lot of producers will be happy to end their partnerships, which have been fractious for years.
“Maple Leaf has some strengths. One of them isn’t working with other people in partnership relationships,” said the man, who wished to remain anonymous because he has business with the company.
“It’s an ugly fistfight right now. There’s a lot of unhappy campers (in the Maple Leaf system).”
In its restructuring announcement, Maple Leaf said it wanted to be the 100 percent owner of hogs produced by barns it operates and it will move toward total ownership of a smaller number of barns.
Kynoch thinks that means Maple Leaf will continue buying hogs from its partners.
“I see this as a lot of hogs being bought from individual producers,” said Kynoch.
Maple Leaf Foods is not alone in losing money on hog slaughter recently. Olymel recently announced it was having troubles in its home province of Quebec and also had to wind down its second shift at its Red Deer plant.
Florian Possberg of Big Sky Farms in Saskatchewan, a partner in the proposed OlyWest plant for Winnipeg, said he hopes the project goes ahead. He expects Olymel to give some clear signals within a couple of months.
“They’re doing their own resorting of their business and their decision on what’s going to happen hasn’t been defined yet,” said Possberg. “They’re going through the same process Maple Leaf did in the last three or four months.”
Possberg said producers need new slaughter plants like the OlyWest plant, and they also need to keep others operating, including the Maple Leaf plant in Saskatoon.
“The need for us as producers to have some place to slaughter hogs is more emphasized today than it was two days ago (before the Maple Leaf announcements),” said Possberg.
“From a producer perspective, the need to do something like we’re doing in Winnipeg is probably greater today than it was previously to the Maple Leaf announcement.
“Whether the same players will be at the table as we go forward, that will be sorted out.”
Perry Mohr, general manager of Manitoba Pork Marketing Co-operative, said Maple Leaf’s plans to get rid of some of its smaller, non-core processing plants won’t inevitably lead to new owners taking over.
“With the kind of margins that the processing industry has been dealing with, I’m not sure there are going to be people lined up to buy processing plants,” said Mohr.
“If a company like Maple Leaf is taking the measures that they are, there could be possibly other moves made as well (by other companies). Long term, it could have negative implications for hog producers.”
