Pork packing expansion questioned

Thursday, May 6, 2010

by PATRICIA GROTENHUIS

A market analyst with the George Morris Centre is questioning expanding processing plants when current capacities are not being met. 

“The fact is that the last thing this industry needs is added capacity,” Kevin Grier wrote in a document released this week entitled Government Help to the Food Industry. “Pork packers in Ontario and on the Prairies are struggling to keep their plants running at capacity,” he asserts.

Grier’s comments follow two recent federal announcements of conditional loans to hog processing plants through the slaughter improvement program. The department’s website says the program’s objective is “to enhance slaughter capacity in regions where it has been demonstrated that the lack of capacity is constraining sector growth.”

The Great Lakes Specialty Meats of Canada Inc. plant in Mitchell will receive $4.5 million towards expanding product lines and increasing capacity. Cambridge Meat Packers will receive $1.6 million for a water treatment plant, needed before the plant, shuttered in 2000, reopens.

Grier was unavailable for an interview. His written commentary recommends removing industry barriers, such as higher taxes and inspection fees and lack of access to current export markets, rather than increasing capacity and adding more specialty equipment. 

Patrick O’Neil, sales team manager for Ontario Pork, says the combined capacity for Ontario hog processors is 95,000 hogs per week In the last four weeks, low supply has kept sales to between 75,000 and 80,000 hogs. According to an Ontario Pork sales report May 7, Ontario Pork sold 80,158 hogs this week, 3,370 fewer hogs than last week.

According to the Agriculture Canada website, the last round of applications for the Slaughter Improvement Program was due at the end of October. The week ending Oct 30 last year, Ontario Pork sold 105,000 slaughter hogs.

Last December, Wilma Jeffray, chair of Ontario Pork, said “their (Ontario processors) primary hog supply is starting to evaporate and that puts their business at risk as well.”

Mary Jane Quinn, spokesperson for the Communication and Consumer Marketing Department at Ontario Pork says there is concern “if plants expand in any way that producers may not expand to meet capacity.” However, “the fact that these facilities are going into niche markets and putting in special equipment is a good thing.” Ontario Pork is hopeful the improvements at the processing facilities will help strengthen the pork industry, she says. 

Federal Agricultural Minister Gerry Ritz also seems optimistic.

“A more innovative way of running product through will lead to efficiencies and of course leads to hopefully a better price for materials right back to the farm gate,” says Ritz in a telephone interview on Tuesday.

Quality Meat Packers Limited bought the Great Lakes plant in September 2009. Jim Gracie, Quality’s vice president of marketing and business development, says the plant will increase value-added production and in the future, increase slaughter capacity from the current 5,000 hogs weekly. 

Changes will include increasing refrigeration capacity, recovery of byproducts and boning capacity. The plant sells to both domestic and export markets.

Albertino Domingues, owner of A.C.D. Wholesale Meats, has renovated the Cambridge plant since buying it in 2005. The last improvement needed is a water treatment plant, scheduled for completion in September. The plant can process 2,000 hogs per day, and will sell products in domestic and export markets.

Gracie and Domingues both say the plants will purchase hogs locally. BF