Processing plant future one less worry for pork board

Tuesday, April 7, 2009

© AgMedia Inc.

by BETTER FARMING STAFF

As Ontario Pork’s board prepares for a new term, there’s one worry off its plate: the short-term future of Maple Leaf Foods Inc.’s Burlington processing plant.

Last week, the company announced it would delay the sale of the plant, “despite active negotiations with several prospective purchasers.” It attributed the delay to economic conditions making credit difficult to obtain and said sales efforts would resume once markets rebound, likely in 2010.

Wilma Jeffray, Ontario Pork’s new chair, says the organization’s board hasn’t discussed the announcement’s implications. “We’re glad that they are continuing, absolutely,” she says, and notes the plant slaughters more than half of the hogs processed in the province.

Maple Leaf’s restructuring plans, including centralizing pork processing in Manitoba, have sparked concerns among producers that the Burlington plant would be shut if a buyer could not be found.

It would mean a processing capacity loss of more than two million hogs annually, according to figures presented in the company’s 2008 annual financial review.

These concerns were a major factor in sparking Ontario Pork’s market renewal strategy project begun in 2006, says Jeffray.

Jeffray says the expressions of interest in the plant shows the business is viable.

Company financial statements indicate its meat products group, which includes the plant, had operating earnings of $29.5 million in 2008 before the costs of a product recall and restructuring are taken into account.

Mary-Ann Hendrikx, the board’s new vice-chair, says selling the plant would make Maple Leaf “competitors for pork in the province through their other (processing) operations. I think there’s probably a little bit of complication along those lines.”
The company may not want to encounter extra competitive pressure under the current market conditions, she says.

Michael Vels, Maple Leaf’s chief financial officer, could not be reached for comment.

Jeffray says the Ontario Pork board’s priority right now is finding a solution to unrest within the sector. “What we’re doing now isn’t that healthy.”

Addressing the long-term sustainability of the industry is next and will “take input from everyone.”

In October, the Ontario Farm Products Marketing Commission removed Ontario Pork’s single desk marketing powers.

Producers and regional associations have appealed the order with the Ontario Agriculture, Food and Rural Affairs Appeal Tribunal. The Tribunal has stayed the order. No date has yet been set for the hearing. BF