In his long, storied career in Canada’s feed industry, Cam Brown has watched the business change and grow.
But he counts as the single most significant business transaction the news that Maple Leaf Foods has bought The Landmark Group.
“Whether you like it or whether you don’t, it is the direction of modern agribusiness and processing,” said Brown. He is the retired head of Feed-Rite and sits on now-parent company Ridley Canada’s board of directors.
Industry insiders knew the two companies were discussing a deal, said Brown, and so it came as no surprise when his friend Bruce Campbell called him to tell him the news.
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Brown said the deal is good for Maple Leaf because it will guarantee its new Brandon plant a steady, uniform supply of hogs. Elite Swine Inc. producers will probably get a better price for their hogs, while The Landmark Group will have money to expand.
Brown predicted the move will pressure other producers and packers to form closer ties.
“If you’re going to be in this game, you’re going to have to do that. The little family-owned production unit is a memory.”
The deal will probably make family farms feel more threatened by corporate investment barns, said Gerry Friesen, a hog producer at the helm of the Manitoba Pork Marketing Co-op Inc.
Friesen said he doesn’t know what the Maple Leaf-Landmark deal means for the co-op. But he said Maple Leaf will still need more hogs for its Brandon plant.
Friesen suspects other processors will follow Maple Leaf’s suit to try to secure supply.
“I’m sure Smithfield won’t sit back and watch Maple Leaf grow,” he noted.
Smithfield Foods Inc. owns Schneider Corp., the other major hog processor in Manitoba.
Earlier this month, Smithfield became the largest hog producer in the United States, owning 60 percent of its slaughter requirements.
Douglas Dodds, head of Schneider Corp., was not available for comment.
George Paleologou, vice-president and chief financial officer of Fletcher’s Fine Foods, said his company is looking at “all kinds of different ways to ensure a long-term supply” for its Red Deer, Alta., plant.
Larry Martin, economist at Ontario’s University of Guelph, said Maple Leaf will provide pricing incentives to ensure Elite Swine hogs go to its new plant.
“Having a pricing relationship that gives you some way to take some of that volatility out will be very attractive,” he said.
After the price debacle of the past 18 months, North American packers are starting to realize they need to guarantee a supply for their plants because many farmers have left the industry.
Martin said farmers in other production sectors should pay heed to this change. The trend will be similar for all commodities, he said.
“Most of our pricing mechanisms are going to change in most of agriculture.”
