'How Do You Sell What You Can't Get Processed?'

Thursday, November 23, 2023

Abattoirs Look For Ways to Meet Demand & Expand The Industry

By Colleen Halpenny & Emily Croft

Ontario has 114 provincially licensed abattoirs that specialize in the slaughter of food animals and play a key role in the value chain of livestock production.

This number, according to Franco Naccarato, executive director of Meat & Poultry Ontario, is just keeping up with the demand from producers.

"From 1999 to 2020, our sector lost 54 per cent of the abattoirs which previously were able to process and provide for that local demand.

"We see our industry looking to continue to offer their services and products to producers and consumers alike but are unable to have a steady stream of processing opportunities. These businesses are vital to the province, and we're actively working on ways to provide them increased support to ensure the food chain is properly supplied," he says.

High costs and limited labour

Naccarato explains that one of the most common issues to those in the industry is a lack of generational interest.

"For those businesses who have been well-established, a lot of the time we're encountering a scenario where they have no succession plan in place, as well as a locational boundary. Many businesses are located near, if not on the same property, as their residential home.

"In order to transfer the business, it would mean giving up their home, or they haven't found a way to transfer the operation to allow them to stay. And we see a lot of our smaller abattoirs closing their doors due to this in recent years."

Abattoir owners, including Matthew Heleniak of Norpac Beef in Norwich, say that finances, regulations, and labour are some of the biggest barriers to their businesses.

"Our biggest challenge is finding labour and finding people that want to work in a meat plant," says Heleniak.

"Secondly, the cost of inputs and regulations have been challenging. Everything has gone up and hasn't come back down since the start of COVID."

More recently, high cattle prices have added more challenges for meat sales.

"The high price of cattle is making it hard to sell middle cuts and medium-priced beef. It has slowed out because the economy is just not there for it, and chicken and pork are cheap alternatives too," says Heleniak.

Sarah Hunt, of Corad Farms in Pakenham, says that when looking at starting their meat business to address high demand for abattoir space, entry costs presented big challenges.

"It was great when you could sell some beef to coworkers and give them local options to what was in the grocery store," says Hunt.

"The abattoir we regularly booked through had to cancel some of our processing slots as the butcher got sick. In calling around to other abattoirs in the area, they were booked solid – for months.

"We were suddenly left with a question of where do we go? We had orders to fill, cattle to process, but how do you sell what you can't get processed?"

Hunt says that she and her husband Chad saw the opportunity to fill that demand and explored financing a new project.

"The numbers just didn't work. At $3 to $4 million, plus permits and regulations and licensing, we knew that if this was an avenue which we wanted to explore we would need to find an existing operation."

Corad Farms purchased an abattoir in February 2020, and quickly learned how to operate within the meat industry alongside their pre-existing beef operation.

Despite the challenges, the demand for small abattoirs in the meat industry leaves opportunities for growth.

Room to grow

Naccarato says the industry could potentially look at a growth of $320 million in three to five years if barriers were less obstructive.

"We are investing in our industry by promoting its value. We are working diligently to find new ways to entice younger generations to explore the meat processing industry as a career option.

"Currently, we are developing a virtual reality tool to take to a provincial trade school recruitment fair. Being a retail butcher is a skilled trade that is not often talked about or funded previously."

Naccarato shares that the industry has seen a shift where an increasing number of farm owners have taken the reins to support themselves and their community needs, similar to the story of the Hunt family.

"The cost of financing a new operation, let alone getting site location visits, is a daunting task. So there's been a positive increase in the number of producers who are taking on existing sites to ensure their product can continue to be processed."

He says the board has been keeping tabs on abattoirs who are not fully at capacity and have created a processor link portal which helps farmers identify where there are opportunities for them.

"Helping to connect farmers and processors is crucial to keep the flow of meat optimized, and it allows us to keep the government informed on those infrastructure gaps to help them better navigate our industry's needs."

How will the industry evolve?

As challenges with labour and high costs persist, while the industry also maintains room for growth, abattoirs in Ontario will likely have to evolve to meet demand while managing their businesses.

Heleniak says that since 2020, consumer demand for meat has stayed strong but changed how it looks.

"During COVID, we'd get lots of calls for custom beef to fill their freezers, but that's kind of gone away. People are buying more on a week-to-week basis," says Heleniak.

He notes that with recent decreased cattle numbers, beef prices have been increasing.

"It's predicted that prices will stay high for a while and we like to see the farmers doing well, but we also have to do well to keep abattoirs open. The bigger places like Cargill and JBS can sustain these prices a bit better than smaller operations."

As these prices evolve, Heleniak says that the industry will need to focus on bringing in the right people who have the skills required to work in an abattoir while watching expenses.

"We want to get better at bringing in the proper people and watching our costs wherever we can. We need to minimize expenses and maximize what we get for our beef."

To solve the labour problem, it may be necessary to look at bringing in skilled labour from outside of Canada. And to minimize expenses, additional operations such as far deliveries may need to be discontinued.

He remains positive about the future, noting that general demand for beef in Ontario has been maintained.

"We feel there's still a strong demand for Ontario beef and that's a good thing." BF