Structure and Major Participants

Pork production is becoming increasingly consolidated in Canada into larger, vertically integrated or vertically coordinated operations.

Quebec

Approximately 50 to 55 per cent of Quebec's production is in the hands of about 25 operations, many with linkages from genetics to feed to production and packing. Large producers with more than 30,000 sows include F. Menard and Cote Paquette. Those with 10,000 or more sow include Breton, Robitaille and Brochu. Menard, Breton and Robitaille are integrated to the packing sector. After that, several other farms control 3,000 to 10,000 sows. The Cooperative Federée system, with about 55,000 sows raised by members, is integrated to varying degrees from feed and genetics through production to Olymel.

As a result of the Assurance stabilisation revenue agricole (ASRA) programme, there is a wealth of information regarding farm size and structure that is not available in the other provinces. Further to that, the following provides a detailed overview of the nature of hog production operations in Quebec.

According to the Fédération des producteurs de porcs du Québec (FPPQ), there were approximately 3,836 producers in the province of Quebec in 2009 who produced more than 7,839,000 market pigs. Only 1,311 farms participated in the program of Stabilization insurance (ASRA). From those, 678 farms were farrow-to-finishing farms. There were 221 farrow-to-wean farms and 412 finishing farms. To analyse these data, one has to take into consideration the fact that the participation in this programme is not required and also that the nursery farms cannot participate in the ASRA programme. Only sows and marketed pigs are covered under ASRA. Therefore, there is no data available about the number of nursery farms in Quebec.

Table 1 shows that the largest number of farrow to finishing farms had 201 to 400 sows and accounted for 27 per cent of total sows. The categories that had the smallest number of farms were the 601- to 1,000-sow and >1,000-sow farms; however these categories combined had in excess of 44 per cent of sows.

Farms in the farrow-to-wean category are presented in Table 2. This category is similarly concentrated toward large farms, with operations over 1,001 sows representing 46 per cent of the total number of sows.

For the hog finishing farms (Table 3), 50 per cent of the farms produced more than 4,001 hogs per year; these accounted for 85 per cent of hog marketings. The farms are concentrated in three regions: Saint-Hyacinthe, Quebec and Beauce. In 2009, respectively for each region, the pig production amounted to 2,346,000, 1,429,000 and 1,171,000 pigs (Table 4).

Maritime Provinces

Turning to the Maritimes, approximately 73,500 pigs were produced in 2009 in the province of New-Brunswick (AAC, 2010). The hogs marketed were mainly slaughtered in the province of Quebec (70,500) and in Nova Scotia (3,000). Nova Scotia produced 22,123 hogs in 2009. These hogs were slaughtered in the Antigonish Abattoir in Nova Scotia. This plant is the only one in the Maritimes and its capacity is of approximately 400 hogs per week. The province of Prince Edward Island produced 83,455 hogs in 2009, which were mainly slaughtered in Quebec and in Nova Scotia (AAFC, 2010).

Ontario

In Ontario, the industry is less consolidated in terms of sow ownership but it remains characterised by vertically aligned production systems or loops. There are only two groups or firms that control 10,000 or more sows in the province. There are four to six units that each have between 5,000 and 10,000 sows. In total, fewer than 10 producers each having 5,000 or more sows represent approximately 25 per cent of the province's herd. After that, up to 20 producers have approximately 3,000 sows each.

The Ontario industry is structured towards the traditional farrow-to-finish operation, with land-based production. Industry participants estimate that about half of production fall into that category. The remainder would be those producers engaged in one or more production functions within a system such as farrowing, nursery or finishing. All functions will be contracted from genetics through feed, production and packing within the production system.

Large Ontario production units include Paragon Farms and Synergy Swine with at least 10,000 sows each. The Progressive Pork Producers (PPP) Cooperative comprises more than 150 independent producers with ownership in Conestoga Meat packers.

With regard to PPP, it is of interest to note that the cooperative represents approximately 35,000 sows. The majority of these production units are farrow-to-finish farms but there are also three-site systems or loops within PPP as well. PPP producers chose to forward integrate into the packing sector in order to ensure hook space and to generate greater stability of returns. The PPP purchased Conestoga Meat Packers in 2001. At the time, it was slaughtering 3,000 head per week. PPP invested in expansion and efficiency programs at Conestoga and as of 2010, it is slaughtering about 13,000 per week.

Prairie Provinces

On the Prairies, production has also consolidated into production systems from genetics through packing. Very little production, perhaps 10 to 15 per cent is now generated by independent farrow-to-finish operations. According to industry estimates, about one-quarter or more of Prairie production is in the hands of operations with 10,000 or more sows while 50 per cent is in the hands of those with 5,000 or more sows.

A unique characteristic of Prairie production is the share that is generated by Hutterite Colonies. Colony production likely amounts to about one-third of Prairie production. Large scale producers include Maple Leaf and Hytek, both vertically integrated into their Brandon and Neepawa slaughter operations. Other large-scale units include Sunterra Farms (vertically integrated), Alberta Pig Company, both in Alberta, Big Sky Farms based in Saskatchewan and Puratone in Manitoba.

The key point to note with regard to production across Canada is the consolidation into fewer and larger units and the degree of vertically coordination and specialization of production systems through the supply chain.

Through the next decade, a significant share of Canadian production will continue to be focused on the US demand for weaners. It is likely that the share of Canadian sows dedicated to the US will increase as US demand for pigs increases and domestic environmental constraints restrict supply. At the same time, within Canada, production coordination between the three stages and slaughter will continue as packers and producers seek to manage supply and pricing risk.

Canadian Pork Packing

At the packing level, there have been two main packers in Canada: Olymel, based in Montreal and Maple Leaf, based in Toronto. These two firms account for approximately two-thirds of the slaughter capacity in Canada. The other packers in Canada are either regional players such as Quality Meat Packers in Ontario, Britco in BC, or speciality niche players like Du Breton in Quebec. Whether the packers are large or small, east or west, the packers are typically export-orientated to countries around the world. Consequently, Canada has become a global leader in pork exports due to packer and industry efforts.

Maple Leaf foods announced a strategic re-organization in 2006, concluding with a recent sale and re-branding of the Burlington plant as 'Fearman's Meats'. This has also involved the closure of smaller plants and consolidation into one large plant in Manitoba.

The company also said it was going to focus on value added production and processing under its brand names. The strategic re-organisation also involved a significant reduction in its sow inventories. The company sold off sows across the Prairies and Ontario. Maple Leaf's sow holdings are now limited to Manitoba where its own supplies make up about one-third of its Brandon packing needs.

Looking to the future, Maple Leaf can be expected to continue to consolidate its packing operations by closures in Ontario and Alberta. Its slaughter capacity is not likely to materially change at least during the first half of the coming decade, after the closures.

Olymel is owned by a large Quebec producer cooperative, Co-op Federée. Olymel has also worked to increase its efficiency by closing smaller plants and seeking to renew wage agreements. Its plant in Red Deer Alberta is working to secure western producer investment in order to expand into a double shift. Olymel still needs to improve the efficiency of its Quebec-based operations. It may work to consolidate production into one plant or it may undergo other forms of structural change with a focus on cost reduction.

The following section provides an overview of the main packers in Canada. The overview is followed with a table (Table 5), which lists the packers by province.

Western Canada

In BC there is one relatively small federally inspected packer, Britco Export Packers of Langley, owned by Donald's Fine Foods. It has a close strategic relationship with the Alberta Pig Company and it markets higher end, niche-type pork products including the Sunhaven Brand through Thrifty Foods (Sobey) on Vancouver Island. Britco also supplies product to Walmart.

Olymel, based in Montreal, is the dominant player in Alberta with its plant in Red Deer. At about 45,000 head per single-shift capacity, the plant represents about three-quarters of the provincial capacity. Other Alberta participants include Maple Leaf's plant in Lethbridge and the Sunterra plant in Trochu. J&M and Sturgeon Valley are also hog packing operations.

With the closure of Maple Leaf's Mitchell's plant in Saskatoon in 2007, as well as the 2005 closure of World Wide Pork in Moose Jaw, Saskatchewan does not have any federally inspected capacity.

In Manitoba, the main operation is Maple Leaf's plant in Brandon. This plant began to operate on a double-shift basis in mid-2008. Its double-shift capacity is 85,000 head. The only plant in Canada that is comparable in size to a typical US plant is the Maple Leaf Brandon plant.

The other packing participant in Manitoba is Springhill Farms, owned by Hytek Inc, the largest hog producer in Canada.

Eastern Canada

Maple Leaf, based in Toronto, has operated a 45,000-head-per-week plant in Burlington. The company recently sold this plant and it is now under the Fearmans banner; in the immediate term, little is changing with this facility. In addition to the Burlington plant, Quality Meat Packers of Toronto is a major presence with the ability to slaughter about 30,000 head per week. Conestoga Meat Packers of Breslau, Ontario is a 14,000 head per week plant, owned by the Progressive Pork Producers Cooperative.

In Quebec, Olymel is the dominant packer with about half the provincial capacity. Other important players include Du Breton of Riviere-du-Loup, which is vertically integrated back to production and is involved in specialty pork products. The 13,000 head Agromex plant is vertically integrated with F. Menard. Weekly, 167,000 pigs are slaughtered in the province of Quebec. There are seven main plants. Olymel owns three of them (Princeville, Vallée-Jonction and Saint-Esprit). Vallée-Jonction is located in Beauce, in one of the main pork-producing region. Princeville is located in the region of Centre-du- Québec while Saint-Esprit is in the region of Lanaudière. In these plants, each week, 37,000, 16,000 and 29,000 market pigs are slaughtered, respectively (CCP, 2010).

For the other four main slaughter plants, one is the property of duBreton. The plant is located in Rivière-du-Loup, Bas-Saint-Laurent. 24,800 hogs are slaughtered in this plant every week. ATRAHAN Transformation inc., located in Yamachiche, near Trois- Rivières, slaughters 18,000 hogs each week. The Abattoir Saint-Alexandre (ASTA) is located in Saint-Alexandre, Bas-Saint-Laurent. Weekly, 19,000 hogs are slaughtered in this plant. At Agromex, a plant owned by F. Ménard, 20,000 pigs are slaughtered each week (CCP, 2010).

There are other hog plants like Lucyporc (5,500 hogs), Giroux (1,900 hogs) and Hébert (2,400 pigs). Lucyporc's plant is located in the region of Mauricie, in the city of Yamachiche. It is a multi-species plant. Giroux, located in Estrie, is also a multi-species plant. Hébert, where mainly culled sows and boars are slaughtered, is located in Sainte-Hélène-de-Bagot, in the region of Montérégie (CCP, 2010).

Table 5. Estimated weekly hog slaughter capacity at major Canadian federally inspected plants
Source: Canadian Pork Council

Observations

The demographics of the Canadian swine industry is such that there is concentration in the hog production with regard to size; this is most evident in Quebec where the data are most fragmented, but this appears to be broadly the case – a small number of large farms produce the bulk of market hogs and hold the bulk of the sows.

Secondly, the hog production segment has declined across the country. This is particularly the case in western Canada and Ontario, but also in Quebec.

Finally, the pork packing segment is relatively concentrated, with the hog production segment increasingly sized to the packing segment. The potential implication of this is to allow, prospectively, packing system alignment back to the farm level.

Further Reading

-

You can view the full report by clicking here.

Further Reading

-

You can read the latest report on pig inventories in Canada from Statistics Canada by clicking here.