Two prairie hog production companies and Quebec packer Olymel are building a major slaughter plant in Winnipeg.
The investors say prairie hog producers, who are expected to benefit from the increased packer capacity and competition, can thank U.S. trade actions for the plant. It is expected to cost $200 million and process 2.25 million pigs per year.
“We’ve been thinking about the border for a long time. The recent trade bout with the U.S. convinced us to go down this road and protect ourselves against the border,” said Manitoba hog producer Claude Vielfaure of Hytek Ltd.
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Hytek and Saskatchewan producer Florian Possberg’s Big Sky Farms are putting money into a company called OlyWest, which will combine Olymel’s Red Deer slaughter plant and the new plant in Winnipeg.
Construction is scheduled to begin in 2006 with the plant starting operations in 2008.
Company officials would not say how much money Hytek and Big Sky are investing in the venture.
Possberg said his company will still supply hogs to the Red Deer plant and has a long-term supply contract with Saskatoon’s Maple Leaf slaughter plant, which will continue.
Possberg said the recent trade spat with the U.S. over hogs, and the problem cattle producers had because of the BSE crisis that kept Canadian cattle out of the United States, pushed him to move further along the supply chain.
“It’s a problem. It’s an issue for us,” said Possberg.
Olymel president Rejean Nadeau said his company thinks slaughtering hogs in Canada makes more sense than sending them south. Live hogs can only be marketed within Canada or sent to the United States, while fresh or frozen boxed pork can be shipped to many nations.
“Instead of the producer selling live hogs and being subject to a countervail … we’re going to process meat and sell meat all over the world,” said Nadeau.
Canada exported more than eight million pigs to the U.S. in 2004, and will probably do the same in 2005, but many pigs were weanlings, especially those from Manitoba.
Building enough feeder barns to supply a big new plant in Winnipeg, the Maple Leaf plants in Brandon and Saskatoon, and the expanding plant in Red Deer will be a challenge.
“It’s a bit of a leap of faith. We know that,” said Possberg. “It’s a bit of a chicken and egg situation: without the slaughter, how do you justify building feeding operations?”
Hytek and Big Sky are trying to find more hog producers to become shareholders in the new company, he said.
The Manitoba government is giving $7.5 million to the new plant for training and site infrastructure, as well as providing a $20 million loan.
Manitoba pork council chair Karl Kynoch was thrilled.
“It’s been a great year for the hog industry. First we won the trade case in April and now we have achieved another packing plant in Manitoba,” he said.
However, Winnipeg city councillor Russ Wyatt was less than delighted. He interrupted Manitoba agriculture minister Rosann Wowchuk’s address at the news conference by repeatedly asking: “What about the odours? Why are you putting this in a high density area?”
University of Missouri hog industry analyst Ron Plain said the new plant should keep more Canadian pigs home. That should help overall North American prices.
“We’ll have the same number of hog plants (in the U.S.), but fewer hogs to kill, so that should create a more competitive situation,” said Plain.
Possberg said he and his partners had considered Saskatchewan sites, but Winnipeg is close to large numbers of hogs, has good transportation access to the United States and has a large labour pool.
