Major Ontario pork processor's insolvencies create 'chaos'

Tuesday, April 8, 2014

by BETTER FARMING STAFF

Quality Meat Packers Limited and Toronto Abattoirs Limited hope to have their Toronto plant operating later this week, says Jim Gracie, vice president of corporate development for the struggling companies.

Last week Quality Meat Packers Limited and Toronto Abattoirs Limited, which operates the plant, filed notices of intent to make a proposal to restructure their financial positions. Quality is “putting together the mechanics to make the hog payments” to producers for future hog purchases.

What does it mean for the industry? Gracie would not comment. “We are looking to move forward and keep in business. For now there is a short term change in how we operate but we are going to work towards getting back to longer term stability.” 

A. Farber & Partners Inc. headquartered in downtown Toronto, was appointed the proposal trustee on April 3, according to a notice on the website for Farber Financial Group. The notice stressed that the packing plant is not bankrupt; there is a stay in place for at least 30 days to allow the company to make a plan to pay back its debts. Farber will publish a list of creditors on April 10.

Ontario Pork’s marketing division is among the creditors owed money for hogs shipped last week to Quality Meat Packers.

“At this point the division is owed money,” confirmed Ontario Pork chair Amy Cronin on Monday.  She didn’t know how much. Ontario Pork’s marketing division sells hogs on behalf of some producers and it also settles with some producers who have direct contracts with processors.

Nor did Ontario Pork know how many producers are affected by Quality’s financial situation. “We are trying to understand how many producers are creditors at this point and what their options are and their ability to get the money that is owed to them,” Cronin says.

Cronin says Quality Meat Packers owes producers for hogs shipped to the Toronto plant one week, Monday to Thursday, March 31 to April 3. (The packer was operating on a four-day week.) “There are some outstanding dollars from (Thursday) March 27,” Cronin says. “Our understanding from Quality is that was a glitch in the system.

“I know that Ontario Pork is looking at any way that we can assist producers . . . if there are ways that Ontario Pork can assist with the relationship between Quality and producers to ensure payment for them before hogs are shipped. That is something we are working quite hard on right now. What is next? I don’t think anybody knows.

“It is a difficult time in our industry right now. It is most certainly unfortunate and it creates chaos within the pork sector and there is a lot of uncertainty at this point. Another week will tell us a whole lot more, I think.”

A little less than 15,000 hogs a week are being shipped from Ontario to packers in Quebec, leaving Ontario plants operating below capacity and at less than optimum efficiency. Cronin doesn’t have an answer as to why pigs are being shipped to Quebec when packers here are going short. “It is an open market place. Ontario Pork doesn’t handle marketing any more. Producers make their own decisions and I’m sure it is based on many factors.”

She also thinks there are many factors why Quality is in financial trouble.

Gracie allows “it is a tough environment because of the volatility in hog prices.”

Randy Duffy, a research associate at Ridgetown agricultural college, says the average hog value for year to date 2014 is close to $210 but there has been a big price run up in prices. A hog that was worth $170 in early January brought $110 more in the last week of March.

Year to date slaughtering in Ontario is averaging about 86,000 hogs a week, with estimated processing capacity at 100,000 to 105,000. Duffy says packers here could easily pick up the pigs shipped to Quebec and an additional 3,000 hogs shipped to the United States. BF